9 cubes>essentials of managerial accounting> content> module 4> learn 1-4
The Lakeland Symphony would like to perform for a neighboring city. Fixed costs for the performance total $5,250. Tickets will sell for $15.75 per person, and an outside organization responsible for processing ticket orders charges the symphony a fee of $2.10 per ticket. The Lakeland Symphony expects to sell 500 tickets.
- How many tickets must the Lakeland Symphony sell to break even?
- How many tickets must the symphony sell to earn a profit of $7,350?
- How much must the Lakeland Symphony have in sales dollars to break even?
- How much must the Lakeland Symphony have in sales dollars to earn a profit of $7,350?
- What is the symphony’s margin of safety in units and in sales dollars?
MacFarlane Printer Machines (MPM) builds three computer printer models: Inkjet, Laser, and Color Laser. Information for these three products is as follows:
InkjetLaserColor LaserTotalSelling price per unit$255$420$1,680 Variable cost per unit$105$158$840 Expected unit sales (annual)12,6006,3002,10021,000Sales mix60%30%10%100%
Total annual fixed costs are $5,250,000. Assume that the sales mix remains the same at all levels of sales.
- How many printers in total must be sold to break even?
- How many units of each printer must be sold to break even?
- How many printers in total must be sold to earn an annual profit of $1,000,000?
- How many units of each printer must be sold to earn an annual profit of $1,000,000?
Use the information from Assignment 2 to perform a sensitivity analysis using Excel. Assume that each scenario that follows is independent of the others. Unless stated otherwise, the variables are the same as in the base case.
- How will total profit change if the Laser sales price increases by 10%?
- How will total profit change if the Inkjet sales volume decreases by 4,000 units and the sales volume of other products remains the same?
- How will total profit change if fixed costs decrease by 20%?
In a one-page “journal”, consider cost structures and sensitivity analysis. What are the characteristics of a company with low operating leverage, and how do these characteristics differ from those of a company that has high operating leverage?
Provide at least two scholarly sources.