Dana's Ribbon World makes award rosettes. Following is information about the company: Variable cost per rosette$ 2.00Sales
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Question:
Dana's Ribbon World makes award rosettes. Following is information about the company:
Variable cost per rosette$ 2.00Sales price per rosette6.00Total fixed costs per month6000.00
Required:
- Suppose Dana's would like to generate a profit of $1,120. Determine how many rosettes it must sell to achieve this target profit.
- If Dana's sells 2,140 rosettes, compute its margin of safety in units, in sales dollars, and as a percentage of sales.
- Calculate Dana's degree of operating leverage if it sells 2,140 rosettes.
- Using the degree of operating leverage, calculate the percentage change in Dana's profit if unit sales drop to 1,819 units.
- Write a new contribution margin income statement to verify change in Dana's profit.
Related Book For
Managerial Accounting
ISBN: 978-0078025518
2nd edition
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips
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