Question
Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed...
Lobster Trap Company is considering automating its manufacturing
facility. Company information before and after the proposed
automation follows:
| Before Automation |
After Automation |
|||||
| Sales revenue | $ | 192,000 | $ | 192,000 | ||
| Less: Variable cost | 103,000 | 46,000 | ||||
| Contribution margin | $ | 89,000 | $ | 146,000 | ||
| Less: Fixed cost | 12,000 | 62,000 | ||||
| Net operating income | $ | 77,000 | $ | 84,000 | ||
Required:
1. Calculate Lobster Trap’s break-even sales dollars
before and after automation. (Round your contribution
margin ratio to 4 decimal places and final answers to 2 decimal
places.)
2. Compute Lobster Trap’s degree of operating
leverage before and after automation. (Round your answers
to 4 decimal places.)
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Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed...
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