Please do not give solution in image format thanku Computing Operating LeverageSuppose the Coffee Bean has a new shop in a Cambridge village shopping center that sells high-end teas and coffees. Further, suppose it has added smoothie drinks to its product line. Below are the assumed sales and cost data for the company.Coffee Tea SmoothieSales price per (12 oz.) servingVariable cost per serving$1.35 $1.250.60 0.45$1.950.75$16,000Fixed costs per monthAssume that the company sells each month an average of 12,000 servings of coffee, 7,500 servings of tea, and 4,500 servings of smoothies.REQUIREDa. Calculate Coffee Bean's operating leverage ratioNumeratorContribution margin +DenominatorPre-tax profit0 xResultOperating leverage ratio0 xb. If sales increase by 20%, by how much will before-tax profit be expected to change?$ 0 xc. If sales decrease by 20%, by how much will before-tax profit be expected to change?$ 0Note: Use a negative sign with your answer to indicate a decrease in profits.

Step 1: Compute for the contribution margin CoffeeTeaSmoothieSales Price1.351.251.95Less: Variable…

Answered: Computing Operating Leverage Suppose…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 84PSB

See similar textbooks

Similar questions

A tree provider to plant nurseries is trying to use customer lifetime value to determine the value of its customers. Two customers are shown below. Use customer lifetime value to determine the importance of each customer. Use an 8 percent discount rate. Avg. Annual Sales Avg. Profit Margin 10% $12,500 $26,000 20% Do not round intermediate calculations. Round your answers to the nearest dollar. NPV (Customer A): $ NPV (Customer B): $ What do you recommend? Customer B ✓ Customer A: Customer B: is more important. Expected Lifetime 5 years 9 years
Download and fill out the Section 5 Comprehensive Problem Template attached below to complete the problems (ignore question 5-2 as this applies to the "combined accounting and finance" course). Problem 5-1 Redlands Inc. sells one product for $5. The variable cost per item is $3, and the fixed costs for the firm are $40. Required: a. Compute the breakeven point in units. b. Compute the number of units and sales revenue needed to achieve a $20 profit. (Ignore income taxes.) c. Assume that the income tax rate for Redlands is 40%. Compute the number of units and sales revenue needed to achieve an $18 net profit. d. Compute the number of units and sales revenue needed to achieve an 8% profit margin. (Ignore income taxes.) e. Compute the number of units and sales revenue needed to achieve a 12% net profit margin. (Assume a 40% income tax rate.) f. Assume that Redlands currently sells 40 units. Redlands estimates that if it increased sales price to $6 per unit demand would decrease by…
A tree provider to plant nurseries is trying to use customer lifetime value to determine the value of its customers. Two customers are shown below. Use customer lifetime value to determine the importance of each customer. Use a 7 percent discount rate. Avg. Annual Sales Avg. Profit Margin Customer A: Customer B: $26,500 $14,000 Do not round intermediate calculans. Round your answers to the nearest dollar. NPV (Customer A): $ 25% 15% Expected Lifetime 11 years 7 years NPV (Customer B): $ What do you recommend? -Select- is more important.
Her Imported from Chr... Imported from Inte... KIDS SCHOOOL CL... SmartAid Family Portal ~ Log... IDES R My account | Roku... a. Break-even point in sales units units b. Break-even point if the selling price were increased to $80 per unit 2019 Coaching S Break-even point Daimler Inc. sells a product for $75 per unit. The variable cost is $50 per unit, while fixed costs are $5,400,000. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $80 per unit. units 2019 RENTALS SCR...
Ralston Dairy gathered this data about the two products that it produces: Products Current SalesValue Estimated AddedProcessing Costs Sales Value IfProcessing Further Frozen yogurt $8,200 $2,100 $11,300 Ice cream 12,100 7,100 18,400 Which of the products should be processed further? Frozen Yougurt because profit increase by $???
Use CVP and compute the sales revenue necessary to achieve an IBIT of $162,000 for a multi-product restaurant from the information below. Food Beverage Total Sales $240,000 $160,000 $400,000 100% VC 144,000 48,000 192,000 48% CM 96,000 112,000 208,000 52% FC 150,000 IBIT 58,000
QUESTION 2 A restaurant has three main products: drinks, meals and desserts. Fixed costs are $397,000. Other financial information is as follows: Item drinks meals desserts Average Purchase (in $) 10 25 10 Average Margin Total Sales Dollars (in %) 40 50 10 60% 20% 70% What are total sales (in dollars) needed to make a profit of $200,000, assuming that the sales mix remains constant? How many drinks would they need to sell in order to make a profit of $200,000, assuming that the sales mix remains constant.
ttempt%3D1434433&cmid%3D715053 ing services SQU Libraries SQU Portal Attendance English (en) Clear my choice Moon Karak sells tea. The average selling price of a cup is OMR 0.200 and the average variable expense per cup is OMR 0.150. The average fixed expense per month is OMR 950. An average of 20,000 cups are sold each month. What is the margin of safety expressed as a percentage of sales? Select one: Oa. 15% Ob. None of the answers given Oc. 10% O d. 20% Oe. 5% Next page vers to Ex5A-3 6SA-8 Appencix
ab. ock esc ~ Microhard produces tablets, laptops and televisions. Microhard typically sells 1,000 tablets a year. The tablet information is as follows: Selling price per unit Direct material cost per unit Direct labor cost per unit Total unavoidable allocated overhead How much would Operating Income decrease if Microhard were to eliminate the tablets? DO NOT INCLUDE PARENTHESES OR NEGATIVE SIGNS IN YOUR ANSWER. Click Save and Submit to save and submit. Click Save All Answers to save all answers. ! 1 Q A @ 2 W S $60 $30 $10 $48,000 #M 3 E $ 4 D R % от оро 5 F MacBook Pro < 6 T G & of r 7 Y H * 00 つ
1/1 * CengageNOWv2 | Online teachir x genow.com/ilm/takeAssignment/takeAssignmentMa.uo?invoker=&takeAssignmentSessionLocator=&inprogress=false Al ... Ralston Dairy gathered this data about the two products that it produces: Current Sales Estimated Added Sales Value If Products Value Processing Costs Processing Further Frozen yogurt $8,000 $2,100 $10,900 Ice cream 12,000 7,200 18,000 Which of the products should be processed further? because profits
View Policies Current Attempt in Progress Burger Queen offers a lunch meal deal for its customers. The customer will get a burger, fry, soft drink, and ice cream for $17. If the customer were to buy each item individually, the cost would be broken down as follows: Burger Fry Soft Drink Ice Cream Using the stand-alone cost allocation, how must of the transaction price should be allocated to the fry, soft drink, and ice cream? (Do not round the intermediate calculations.) $3.40 $3.40 $8.50 $4.25 $4.00 $4.50 $0.5 zero $4.50 $3.20 $3.60 $4.25 $3.40 $4.50 zero $4.50
Activity Rate Travel Deliveries $2 per mile driven. $ 50 per delivery $ 22 per phone call Customer service Two of the company's many customers include Customer A and Customer B. These two customers consumed the company's activities as follows: Total Expected Activity Customer A Customer B 250 5 12 Activity Cost Pool Travel (number of miles driven) Deliveries (number of deliveries) Customer service (number of phone calls) How much cost would be assigned from the Travel activity to Customer A? Multiple Choice $170 $60 $680 340 15 20

SEE MORE QUESTIONS

Recommended textbooks for you

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS