Mulvey Corporation manufactures hand painted vases. The company currently sells 50,000 units per year. The company's revenues and costs follow:

Required:
a. Calculate Mulvey's before-tax break-even point in units and sales dollars.
b. Calculate Mulvey's contribution margin ratio.
c. Calculate Mulvey's variable cost ratio.
d. Calculate Mulvey's margin of safety in units and sales dollars.
e. Calculate Mulvey's degree of operating leverage.
f. Using your answer from (e), determine what impact a 30% increase in sales volume would have on pretax profits. Use an income statement to prove your answer by calculating the pretax profits at the new sales volume level.

Question

Mulvey Corporation manufactures hand painted vases. The company currently sells 50,000 units per year. The company's revenues and costs follow:
  
Required:
a.	Calculate Mulvey's before-tax break-even point in units and sales dollars.
b.	Calculate Mulvey's contribution margin ratio.
c.	Calculate Mulvey's variable cost ratio.
d.	Calculate Mulvey's margin of safety in units and sales dollars.
e.	Calculate Mulvey's degree of operating leverage.
f.	Using your answer from (e), determine what impact a 30% increase in sales volume would have on pretax profits. Use an income statement to prove your answer by calculating the pretax profits at the new sales volume level.

Quizplus · Accepted Answer

The Answer of Mulvey Corporation manufactures hand painted vases. The company currently sells 50,000 units per year. The company's revenues and costs follow:
  
Required:
a.	Calculate Mulvey's before-tax break-even point in units and sales dollars.
b.	Calculate Mulvey's contribution margin ratio.
c.	Calculate Mulvey's variable cost ratio.
d.	Calculate Mulvey's margin of safety in units and sales dollars.
e.	Calculate Mulvey's degree of operating leverage.
f.	Using your answer from (e), determine what impact a 30% increase in sales volume would have on pretax profits. Use an income statement to prove your answer by calculating the pretax profits at the new sales volume level.

Mulvey Corporation Manufactures Hand Painted Vases