Ramada Company produces one golf cart model. A partially complete table of compa
ID: 2600434 • Letter: R
Question
Ramada Company produces one golf cart model. A partially complete table of company costs follows: Required 1. Complete the table. (Round your "Cost per Unit" answers to 2 decimal places.) Answer is complete and correct. Number of Golf Carts Produced a 400 Units 600 Units 800 Units Total costs 256,000 S 384,000 $ 512,000 144,000 144,000 | 144,000 Variable costs Fixed costs per year Total costs $ 400,000 528,000 656,000 Cost per unit Variable cost per unit Fixed cost per unit $ 640.00S 640.000$ 640.000 360.00 240.0001 180.00 Total cost per unit $1,000.00 880.00 820.00 2. Ramada sells its carts for $1,600 each. Prepare a contribution margin income statement for each of the three production levels given in the table. Answer is complete and correct. Golf Sold Produ 400 units 600 units 800 units 640,000 960,000 1,280,000 256,0000 384,0000 512,000 Sales Revenue Variable Costs 384 ,0000S 144,000 576,000 144,000 768,000 144,000 Contribution Margin Fixed Costs Net Operating Income 240,000 $ 432,000S 624,0000Explanation / Answer
7.
Answer = 1.3
In $
Sales (650 * $1600)
1,040,000
Variable Cost (650 * $640)
416,000
Contribution Margin
624,000
Fixed Cost
144,000
Net Income or EBIT
480,000
DOL = Contribution / EBIT
= 624,000 / 480,000
DOL = 1.3
8.
Answer = 19.5%
DOL = Contribution / EBIT
OR
= % Change in EBIT / % Change in Sales
DOL of 1.3 as computed above implies that 1% change in Sales will produce 1.3% change in EBIT.
Hence if Sales decreases by 15% then EBIT will also decrease by (15*1.3) = 19.5%
DOL = % Change in EBIT / % Change in Sales
1.3 = % Change in EBIT / (15%)
% Change in EBIT = (15%) * 1.3
% Change in EBIT = 19.5%
In $
Sales (650 * $1600)
1,040,000
Variable Cost (650 * $640)
416,000
Contribution Margin
624,000
Fixed Cost
144,000
Net Income or EBIT
480,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.