Use the information below to answer the following questions.
Unique Tables manufacture coffee tables made of recycled timber. Market research has suggested that there will be strong demand for the tables. Due to this, management is debating whether to lease a new turning machine to meet increased production. To assist in their decision-making, the management accountant has supplied the following information:
$\begin{array}{lll}&\text { Without }&\text { With }\
&\text { turning machine }&\text { turning machine }\
\text { Expected level of sales } & 1500 \text { units } & 1500 \text { units } \
\text { Sales price per unit } & \$ 150 & \$ 150 \
\text { Variable costs per unit } & \$ 120 & \$ 110 \
\text { Fixed costs } & \$ 7,500 & \$ 15,000
\end{array}$
-Refer to the table above. The operating gearing for Unique Tables is:

Question

Use the information below to answer the following questions.
Unique Tables manufacture coffee tables made of recycled timber. Market research has suggested that there will be strong demand for the tables. Due to this, management is debating whether to lease a new turning machine to meet increased production. To assist in their decision-making, the management accountant has supplied the following information:
 $\begin{array}{lll}&\text { Without }&\text { With }\
&\text { turning machine }&\text { turning machine }\
\text { Expected level of sales } & 1500 \text { units } & 1500 \text { units } \
\text { Sales price per unit } & \$ 150 & \$ 150 \
\text { Variable costs per unit } & \$ 120 & \$ 110 \
\text { Fixed costs } & \$ 7,500 & \$ 15,000
\end{array}$
-Refer to the table above. The operating gearing for Unique Tables is:

Quizplus · Accepted Answer

Operating gearing is higher with the turning machine because fixed costs increase significantly, which raises the proportion of fixed costs relative to total costs.

Use the Information Below to Answer the Following Questions -Refer to the Table Above