profit would be 45‚000 c. What is the degree of operating leverage at 20‚000 bags and at 25‚000 bags? Why does the degree of operating leverage change as the quantity sold increases? At 20‚000 bags the DOL is 5% and at 25‚000 bags the DOL is 2.8 %. The degree of operating leverage changes because the operating income increases. d. If Healthy Foods has an annual interest expense of $10‚000‚ calculate the degree of financial leverage at both 20‚000 and 25‚000 bags. The EBIT at 20‚000 bags is
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Conclusion In order for the company to maximize on production‚ producing 70‚000 units at Ogden and 50‚000 units at Sandy will give the company a difference of $220.00 versus $270.00 at producing 75‚000 at Ogden and 45‚000 at Sandy. The operating leverage here shows the effects that fixed cost have on the change in operating income. Understanding the breakeven at both facilities helps to determine how allocation can occur (Datar‚ Schoenebeck‚ 2014). Reference Datar & Schoenebeck (2014).
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Current Location ? .HBLC_4124_ACC_202_J002_32368 ACC 202: Managerial Accounting (4124_J002) Quizzes Take Test: Chapter 05 . . Menu Management Options Expand AllCollapse All ..Course Menu:BLC_4124_ACC_202_J002_32368 (ACC 202: Managerial Accounting (4124_J002)) H Announcements . Syllabus . PowerPoint Slides . Tutoring Schedule . Connect . Extra Class Exercises . Quizzes . Exams . My Grades . Help . Take Test: Chapter 05 .Content Assistive Technology Tips [opens in
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to attain a target income from operations of € 300 million? 5. Compute Benetton’s margin of safety using data from 2003 and 2004 . Why do your answer for the two years differ from one another? 6. What is Benetton’s degree of operating leverage in 2004 ? If Benetton ‘s sales in2004 had been 6% higher than what is shown in the annual report‚ what income from operations would the company have earned?. What percentage increase in income from operations does this represent? 7. What income
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Contents Summary of Case 1 Question: 2 Answer: 3 Summary of Case Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather‚ it relies completely on independent sales agents to market its products. These agents are paid a commission of 15% of selling price for all item sold. The company’s budgeted income statement for next year follows: Pittman Company Budgeted Income Statement For the Year Ended December
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Question 1 1. The following is Addison Corporation’s contribution format income statement for last month: Sales $1‚000‚000 Less: Variable Expenses $ 700‚000 Contribution Margin $ 300‚000 Less: Fixed Expenses $ 180‚000 Operating Income $ 120‚000 The company has no beginning or ending inventories. A total of 20‚000 units were produced and sold last month. What is the company’s margin of safety in dollars? $400 000 10
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A Review of ‘Strategy as Stretch and Leverage’ – By Gary Hamel and C.K. Prahalad URN: 6029471 Word Count: 1647 A Review of ‘Strategy as Stretch and Leverage’ – By Gary Hamel and C.K. Prahalad This review will focus on the article ‘Strategy as Stretch and Leverage’ by Gary Hamel and C.K. Prahalad (1993). This review will identify the arguments made in the article and then place it within the context of one of the key debates in strategy academia. The review will then investigate the underlying
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5897/AJBM11.2266 ISSN 1993-8233 ©2012 Academic Journals Full Length Research Paper Operating leverage and systematic risk Kheder Alaghi Armenian State Agrarian University‚ Armenia. E-mail: khederalaghi@gmail.com. Accepted 25 October‚ 2011 The aim of this paper is to study the effect of operating leverage in the systematic risk of listed companies in Tehran Stock Exchange. In this study‚ operating leverage (OL) as independent variable and systematic risk (β) as the dependent variable are considered
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Case 9-4 Cost-Volume-Profit Analysis and Strategy: The ALLTEL Pavilion Andrea Mullens 1) The competitive strategy of the ALLTEL Pavilion is largely focused on differentiation. With no substantial competitors in the geographic region‚ they are looking to create an “experience” for the audience and thus maintain the sustainability of the venue. They do this primarily through solid Marketing efforts. They are focused on the making the venue and each event as profitable as possible‚ by making
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liability of CPK‚ which had been almost $10 million in 2006. 2. Using the scenarios in case Exhibit 9‚ what role does leverage play in affecting the return on equity (ROE) for CPK? The operating leverage effect on ROE is percentage change of EBIT is more than percentage change in Sale. If percentage change of EBIT is more than the percentage change in sales‚ this operating leverage will affect ROE positively because at this level‚ per unit fixed cost will decrease and small increase in sale will
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