Crest Canoe Co. produces and distributes three types of oars to accompany its various canoe product lines. Financial information for the past year on these three oars is as follows: Assuming that Crest's overall sales mix for its oars remains the same and fixed costs increase by $120,000 per year, calculate and provide the following additional information:
a. What is Crest Canoe's break-even point in terms of sales dollars? (Hint: Compute the contribution margin ratio for the company (total). Round to nearest whole dollar.)
b. What is Crest's operating income?
c. What is Crest's degree of operating leverage (DOL)? (Round to 4 decimal places.)

Question

Crest Canoe Co. produces and distributes three types of oars to accompany its various canoe product lines. Financial information for the past year on these three oars is as follows:  Assuming that Crest's overall sales mix for its oars remains the same and fixed costs increase by $120,000 per year, calculate and provide the following additional information: 
a. What is Crest Canoe's break-even point in terms of sales dollars? (Hint: Compute the contribution margin ratio for the company (total). Round to nearest whole dollar.)
b. What is Crest's operating income?
c. What is Crest's degree of operating leverage (DOL)? (Round to 4 decimal places.)

Quizplus · Accepted Answer

The Answer of Crest Canoe Co. produces and distributes three types of oars to accompany its various canoe product lines. Financial information for the past year on these three oars is as follows:  Assuming that Crest's overall sales mix for its oars remains the same and fixed costs increase by $120,000 per year, calculate and provide the following additional information: 
a. What is Crest Canoe's break-even point in terms of sales dollars? (Hint: Compute the contribution margin ratio for the company (total). Round to nearest whole dollar.)
b. What is Crest's operating income?
c. What is Crest's degree of operating leverage (DOL)? (Round to 4 decimal places.)