Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 1.operating leverage - superior door company sells

1.Operating leverage - Superior Door Company sells pre-hung doors to home builders.The doors are sold...

70.2K

Verified Solution

Question

Accounting

1.Operating leverage - Superior Door Company sells pre-hung doors to home builders.The doors are sold for $60 each.Variable costs are $42 per door and fixed costs total $450,000 per year.The company is currently selling 30,000 doors per year.

Doors = $60 each FE = $450,000 future

VC = $42 per door sales = 30,000 increase 7,500 door sales

A.Prepare a contribution format income statement for the company at the present level of sales and compute the degree of operating leverage.

B.Management is confident that the company can sell 37,500 doors next year (an increase of 7,500 doors, or 25% over current sales).Compute the expected net operating income for next year. (Do not prepare an income statement; use the degree of operating leverage to compute your answer.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students