Head-First Company had planned to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 5,000 units sold is $100,500. The degree of operating leverage is 1.5. Now Head-First expects to increase sales by 10% next year.
Required:
1. Calculate the percent change in operating income expected.___ %
2. Calculate the operating income expected next year using the percent change in operating income calculated in Requirement 1. $___
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Ответ:
Instructions are listed below.
Explanation:
Giving the following information:
Sales= 5,000 units
Selling price= $75
The unit variable cost= $45
Total fixed cost equals= $49,500
Operating income at 5,000 units sold is $100,500.
Degree of operating leverage= 1.5
Now Head-First expects to increase sales by 10% next year.
1) % Change on income= ?
We know that the degree of operating leverage is calculated by the following formula:
degree of operating leverage= %change in income/ %change in sales
1.5= %change in income/0.10
0.15= %change in income
15%= %change in income
2) Net operating income
Sales= 5,500*75= 412,500
Total variable cost= 5,500*45= (247,500)
Contribution margin= 165,000
Fixed costs= (49,500)
Net operating income= 115,500
Change in income= (115,500 - 100,500)/100,500= 0.1493= 14.93%
Ответ:
Deductible
Explanation:
on insurance there is a section for a deductible.