Ch 4 – PLEASE USE MY QUESTION TO ANSWER


Question Description:

20

Ch 4 – PLEASE USE MY QUESTION TO ANSWER 1 answer below » Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in
the 1930s. The retro-look cycle would be sold for $14,000 and at that price, Thad estimates 600 units would be sold each year. The variable
cost to produce and sell the cycles would be $9,800 per unit. The annual fixed cost would be $1,890,000. a. What is the break-even in unit sales? Break-even in unit sales View complete question » b. What is the margin of safety in Thad Morgan, a motorcycle enthusiast, has been exploring the possibility of relaunching the Western Hombre brand of cycle that was popular in
the 1930s. The retro-look cycle would be sold for $14,000 and at that price, Thad estimates 600 units would be sold each year. The variable
cost to produce and sell the cycles would be $9,800 per unit. The annual fixed cost would be $1,890,000. a. What is the break-even in unit sales? Break-even in unit sales b. What is the margin of safety in dollars (Omit the “$” sign in your response.) Margin of safety in dollars $ c. What is the degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage Thad is worried about the selling price. Rumors are circulating that other retro brands of cycles may be revived. If so, the selling price for the
Western Hombre would have to be reduced to $11,000 to compete effectively. In that event, Thad would also reduce fixed expenses to $1,456,000 by
reducing advertising expenses, but he still hopes to sell 600 units per year. d. What would the net operating income be in this situation? (Negative amount should be indicated by a minus sign.
Omit the “$” sign in your response.) Net operating income (loss) $ View less » Dec 07 2013 09:54 PM

Answer

20