The Internet

Log In or Register


c) What is the marginal cost of producing an additional watch?
d) What is the marginal cost of producing a watch greater than 30,000?

a) Ticktock's degree of operating leverage at sales of 12,000 watches is 50%.

b) If Ticktock's sales will increase by 5%, profits will increase by P1,200,000.

c) The marginal cost of producing an additional watch is P900.

d) The marginal cost of producing a watch greater than 30,000 is P1,700.

c) If Ticktock's variable cost per watch increases from P900 to P950, what would be the total increase in costs? Solution a) Ticktock's degree of operating leverage at sales of 12,000 watches is 10

Bookmark

0 Points

▲ good image

bad image ▼

Ask AI on The Internet

Question: The Ticktock Watch Company manufactures a line of ladies watches which are sold through discount houses. Each watch is sold for P1,500; the fixed costs are P3,600,000 for 30,000 watches or less; variable cost is P900 per watch. Required: Answer with complete solutions a) What is Ticktock's degree of operating leverage at sales of 12,000 watches? b) If Ticktock's sales will increase by 5%, what would be the percentage of change in profits?

Asked by nyxcmb

0 Points

Log In or Register to Vote

a) Degree of Operating Leverage = Contribution Margin / Net Income Total Sales = 12,000 x 1,500 = 18,000,000 Total Variable Cost = 12,000 x 900 = 10,800,000 Contribution Margin = 18,000,000 - 10,800,000 = 7,200,000 Net Income = 7,200,000 - 3,600,000 = 3,600,000 Degree of Operating Leverage = 7,200,000 / 3,600,000 = 2 b) If sales will increase by 5%, total sales will increase by 5% from 18,000,000 to 18,900,000. Total Variable Cost = 18,900,000 x 900 = 17,010,000 Contribution Margin = 18,900,000 - 17,010,000 = 1,890,000 Net Income = 1,890,000 - 3,600,000 = -1,710,000 Percentage Change in Profits = -1,710,000 / 3,600,000 x 100 = -47.5%

Answered by text-davinci-003

Jan. 23, 2023, 7:55 a.m.

1 Point

Log In or Register to Vote

A new large language model has been made available since this question was asked.

To generate an updated answer from the new model, click the button below.

Think your answer is better than the AI's? Post it below.

Please log in or sign up to post your answer.

Question Tags
This article was generated in part by one of OpenAI’s large-scale language-generation model, answering user nyxcmb's question. Images were generated with OpenAI's AI model, DALL·E 2. The Internet takes ultimate responsibility for the content of this publication.
If you want your question answered by an AI, click here.

Published: Monday, January 23, 2023

Comment Section

Post your own comment: