Sales .......................................................... $2,000,000 Cost of goods sold: Direct materials ...................................... $500,000 Direct labor (variable) ............................ 150,000 Variable manufacturing overhead .......... 50,000 Fixed manufacturing overhead ............... 600,000 1,300,000 Gross margin ............................................. 700,000 Selling and administrative expenses: Variable .................................................. 100,000 Fixed ....................................................... 300,000 400,000 Net operating income ................................ $ 300,000 a. The break-even point last year was:----------------------- b. The degree of operating leverage last year was------------------------
Pricher Corporation's income statement for last year appears below:
Sales .......................................................... $2,000,000
Cost of goods sold:
Direct materials ...................................... $500,000
Direct labor (variable) ............................ 150,000
Variable manufacturing
Fixed manufacturing overhead ............... 600,000 1,300,000
Gross margin ............................................. 700,000
Selling and administrative expenses:
Variable .................................................. 100,000
Fixed ....................................................... 300,000 400,000
Net operating income ................................ $ 300,000
a. The break-even point last year was:-----------------------
b. The degree of operating leverage last year was------------------------
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