24 underoption2thetotalcmoi 30 1504500

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ×ȹ contributionȹ× (1  ­‑ Tax  Changeinnetincome =ȹ ȹ numberofcustomersȺ ȹ margin Ⱥ rate)   = (150,000 ­‑125,000)×$4.80×(1 ­‑0.30)   = $120,000×0.7=$84,000   Newnetincome = $84,000+$105,000=$189,000  3 ­‑16(cont’d)                Thealternativeapproachis: Revenues,150,000×$8.00 Variablecostsat40% Contributionmargin Fixedcosts Operatingincome Incometaxat30% $1,200,000 480,000 720,000 450,000 270,000 81,000 Netincome $189,000 3 ­‑23 (25min.)  Operatingleverage.  1.  a.  b.  2.   3.  LetQdenotethequantityofbraceletssold BreakevenpointunderOption1 $125Q ­‑$80Q=($435 × 3) $45Q=$1,305 Q=29bracelets BreakevenpointunderOption2 $125Q ­‑$80Q ­‑(0.12×$125Q)=0 $30Q=0 Q=0 Allcos...
View Full Document

Ask a homework question - tutors are online