Author Question: Colorado Furniture Company manufactures natural weathered reclaimed wood furniture. The company ... (Read 19 times)

gjjjjjdkkkkk3k3k33k · **on:** Feb 5, 2023

Question 1

Patton Company's selling price is $100, variable costs are 60% of sales, and fixed costs total $60,000.

Required:

a.	At a $400,000 sales level, what is Patton's degree of operating leverage?

b.	If sales volume increases by 10%, what will be the amount of increase in operating

income?

Question 2

Colorado Furniture Company manufactures natural weathered reclaimed wood furniture. The company produces two sizes of beds. Data for the company's activity during a typical period are presented below:

	Queen	King
Units sold	100	300
Sales price	$1,800	$2,000
Variable cost per unit	$1,080	$1,100

The company incurs $300,000 in fixed costs during the year. Assuming the sales mix is constant, what will Colorado's operating income be if sales volume increases by 10%?

kaelamcrone · **Reply #1 on:** Feb 5, 2023

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