AC505 Week 1 - 3 and Midterm - Degree of Operating Leverage...

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Degree of Operating Leverage Example Break Even (+Target Profit) in DOLLARS or SALES Fixed Costs PER UNIT (TFC+TP)/CM Ratio-U Fixed Overhead $0.00 Direct Materials $3.00 per unit Total Fixed Costs $0.00 Fixed General and adminis + $0.00 Direct Labor $0.50 per unit Target Profit + $0.00 Fixed Costs PER UNIT eq $0.00 Variable Overhead $4.00 per unit eq $0.00 Fixed Overhead per unit Contribution Margin Ratio / UNIT div 0.3333 TOTAL Fixed Costs Variable Sel ing $0.50 per unit Break Even (+Target Profit) in DOLLARS or SALES eq $0.00 Fixed Costs PER UNIT $0.00 Fixed General and administrative per unit Total Number Units Produc * 12,000 Units Produced 12,000.00 per month Break Even (+Target Profit) in Units TOTAL Fixed Costs eq $0.00 Units in beginnning finished goods 0.00 (TFC+TP)/CM $-U Units Sold 11,500.00 Total Fixed Costs $0.00 Contribution Margin $/UNIT Sel ing Price $12.00 per unit Target Profit + $0.00 Sel ing Price Per Unit $12.00 eq $0.00 Direct Materials + $3.00 Contribution Margin $/UNIT div $4.00 Direct Labor + $0.50 Break Even (+Target Profit) in Units eq $0.00 Variable Overhead + $4.00 Fixed Overhead $20,000.00 per month Variable Sel ing + $0.50 Fixed General and administrative $18,000.00 per month Margin of Safety Var Cost Per Unit eq $8.00 Sales Revenue - (BE+TP$) Var Costs Per Unit - $8.00 Sel ing Price Per Unit $12.00 Contribution Margin $/UNITeq $4.00 Units Solds + 11,500.00 eq $138,000.00 Contribution Margin Ratio / UNIT Break Even (+Target Profit) in DOLLARS or SALES - $0.00 Contribution Margin $/UNIT $4.00 Margin of Safety $138,000.00 Sel ing Price Per Unit div $12.00 Contribution Margin Ratio / UN 0.3333 Degree of Operating Leverage CM$ / Net Income Gross Revenue Contribution Margin $46,000.00 Sel ing Price Per Unit $12.00 Net Income div $8,000.00 Units Sold * 11,500.00 Degree of Operating Leverage 5.7500 Gross Revenue eq $138,000.00 Total Variable Costs per Month Income Statement Var Cost Per Unit $8.00 Revenue $138,000.00 Units Sold * $11,500.00 Variable Costs - $92,000.00 Total Variable Costs eq $92,000.00 Contribution Margin eq $46,000.00 Fixed Costs - $38,000.00 Total Fixed Costs per Month Net Income eq $8,000.00 Fixed Overhead per Month $20,000.00 Fixed General and Admin + $18,000.00 $38,000.00 Degree of Operating Leverage Harry's Harmonicas, Inc., October Production Activity Break Even (+Target Profit) in DOLLARS or SALES Fixed Costs PER UNIT (TFC+TP)/CM Ratio-U Fixed Overhead $0.00 Direct Materials $20.00 per unit Total Fixed Costs $0.00 Fixed General and adminis + $0.00 Direct Labor $17.00 per unit Target Profit + $0.00 Fixed Costs PER UNIT eq $0.00 Variable Overhead $9.00 per unit eq $0.00 Fixed Overhead per unit Contribution Margin Ratio / UNIT div 0.6000 TOTAL Fixed Costs Variable Sel ing $4.00 per unit Break Even (+Target Profit) in DOLLARS or SALES eq $0.00 Fixed Costs PER UNIT $0.00 Fixed General and administrative per unit Total Number Units Produc * 550 Units Produced 550.00 per month Break Even (+Target Profit) in Units
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This note was uploaded on 03/26/2012 for the course AC505 AC505 taught by Professor Dillan during the Spring '10 term at Keller Graduate School of Management.

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AC505 Week 1 - 3 and Midterm - Degree of Operating Leverage...

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