Safari File Edit View History Bookmarks Develop Window Help ezto.mhed 1. Complet

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Safari File Edit View History Bookmarks Develop Window Help ezto.mhed 1. Complete the table. (Round your "Cost per Unit" answers to 2 decimal places.) 400 Units 500 Units 600 Units Total costs 380,000 80,000 S 560,000 Variable costs Total costs Cost per unit Total cost per unit 2 Ramada sells its carts for $1,900 each. Prepare a contribution margin income statement for each of the three production levels given in the table. 400 units 500 units 600 u Net Income 4. Caloulate Ramada's break-even point in number of units and in sales revenue. (Round your final answers to the nearest whole number.) Even Unis ven Sales Carts 5. Assume Ramada soid 200 carts last year. Without performing any calculations, determine whether Ramada eamed a proft last year Yes No 6. Calculate the number of carts thet Ramada must sel to earn $48,000 proft 7. Calculate Ranada's degree ol operatig leverage if n sets 550 arts. (Round your answer to 4 decimal places, Os-asas snodd be entered as

Explanation / Answer

1 Particulars 400 500 600 Total Cost Variable cost $304,000.00 $380,000.00 $456,000.00 Fixed cost $180,000.00 $180,000.00 $180,000.00 Total Cost $484,000.00 $560,000.00 $636,000.00 Cost per unit $1,210.00 $1,120.00 $1,060.00 Variable cost per unit $760.00 $760.00 $760.00 Fixed cost per unit $450.00 $360.00 $300.00 Total cost per unit $1,210.00 $1,120.00 $1,060.00 Fixed cost per unit is variable, but in aggregate it is fixed. Variable cost per unit is fixed, but in aggregate it is variable. 2 Particulars 400 500 600 Sales $760,000.00 $950,000.00 $1,140,000.00 Less: Variable expense $304,000.00 $380,000.00 $456,000.00 Contribution margin $580,000.00 $770,000.00 $960,000.00 Less: Fixed Cost $180,000.00 $180,000.00 $180,000.00 Net Operating Income $400,000.00 $590,000.00 $780,000.00 4 Break-Even Units Break-Even Units=(Fixed Cost/Contribution Margin) 180000/(1900-760 variable cost) 157.8947368 Units Approx Break-Even Sales Revenue Break-Even Sales Revenue=Break even units x sales price) 157.89 x 1900 $300,000.00 5 YES                         In this case, since the break even unit’s accounts for 157.89 and Ramada has sold 200 carts last year which is above the break even units. Hence, it is ascertained that Ramada has earned profit last year. 6 No. of Carts to earn $48000 profits= Fixed Cost + Expected Profit/Contribution per unit (180000+48000)/(1900-760) 200 units 7 Operating leverage Operating leverage=Contribution Margin/Operating Income 550 Carts Sales $1,045,000.00 Less: Variable Cost $418,000.00 Contribution margin $627,000.00 Less: Fixed Cost $180,000.00 Net Operating Income $447,000.00 DOL=627000/447000 1.402684564

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