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The section of Waterways that produces controllers for the company provided the following information.
Sales for month of February 4,000
Variable manufacturing cost per unit $9.75
Sales price per unit $42.50
Fixed manufacturing overhead cost (per month for controllers) $81,000
Variable selling and administrative expenses per unit $3.00
Fixed selling and administrative expenses (per month for controllers) $13,122
Contribution Margin Ratio 70 %
Degree of Operating Leverage 4.78
Break-even Point in Dollars $134,460
Margin of Safety Ratio 20.9 %
What does this information suggest if Waterways cost structure is the same for the company as a whole?
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