Malverns Bicycle Co is a company that manufactures bicycles. Total Fixed Costs: $1,150,000 Variable Costs:...
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Accounting
Malverns Bicycle Co is a company that manufactures bicycles.
Total Fixed Costs: $1,150,000
Variable Costs: $105/bike
Selling Price: $230/bike
Sales Volume: 14,000
Required:
(a) Discuss the two formats of income statement that can be used for a manufacturing company using the knowledge of gross margin and contribution margin.
(b) Calculate the unit contribution margin and break even points in units.
(c) Calculate the target operating profit.
(d) Calculate the contribution margin ratio and target sales revenue.
(e) Use the Degree of Leverage (DOL) to calculate the new operating profit if sales volume falls by 10%.
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