In: Accounting
Ramada Company produces one golf cart model. A partially complete table of company costs follows:
Number of Golf Carts Produced and Sold 800 Units 1000 Units 1200 Units
Total costs
Variable Cost $600,000
Fixed costs per year $360,000
Total costs $960,000
Cost per unit
Variable cost per unit
Fixed cost per unitTotal cost per unit
1. Ramada sells its carts for $1,500 each. Prepare a contribution margin income statement for each of the three production levels given in the table.
2.Calculate Ramada’s break-even point in number of units and in sales revenue.
3. Assume Ramada sold 450 carts last year. Without performing any calculations, determine whether Ramada earned a profit last year.?
4. Calculate the number of carts that Ramada must sell to earn $90,000 profit.
5. Using the degree of operating leverage, calculate the change in Ramada’s profit if sales are 15 percent less than expected.