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Managerial Accounting Homework 1 Comprehensive CVP Analysis
Managerial Accounting Homework 1 Comprehensive CVP Analysis
ID: 202211674
X=4
Managerial Accounting
Homework 1
1
Mishal Alzahrani
ID: 202211674
X=4
Breakeven for a multiproduct firm
Q-2 Peppy Scooters plans to sell a motorized standard scooter for $65 and a motorized chrome scooter for
$85. Peppy Scooters purchases the standard scooter for $54 and the chrome scooter for $64. Peppy
Scooters expects to sell two chrome scooters for every three standard scooters. The company’s
monthly fixed expenses are $9,800. How many of each type of scooter must the company sell monthly to
breakeven? To earn $8,400?
2
Mishal Alzahrani
ID: 202211674
X=4
Compute margin of safety and operating leverage
Q-3 Tom’s Repair Shop has a monthly target operating income of $34 ,000. Variable
expenses are 44% of sales, and monthly fixed expenses are $7,500.
Requirements
1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.
2. Express Tom’s margin of safety as a percentage of target sales.
3. What is Tom’s operating leverage factor at the target level of operating income?
4. Assume that the company reaches its target. By what percentage will the company’s
operating income fall if sales volume declines by 12%?