Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats...

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Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but is cunen

Light Me Up Lamps has varlable expenses of 30 % of sales and monthily faed expenses of 5140,000. The monthly target operating

business accounting

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Answer 1

Answer #1

Sky high

For special order :

Sales ( 310 * 3400 )		1054000
(-) Variable costs :
Manufacturing ( 220 * 3400 )	748000
Marketing and administrative ( 60 * 3400 )	204000	952000
Contribution margin		102000
(-) Increase in fixed cost		13000
Increase in operating income		89000

Answer : Option D [ Increase by $89,000 ]

Light Me Up

Target Contribution margin = Target Operating income + Fixed expense = 50000 + 140000	190000

Operating leverage factor at the target level of operating income = Target contribution margin / Target operating income = 190000 / 50000	3.8	Option D

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Answer 2

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