Question 3
a. Complete the table.
b. Ramada sells its carts for $1,650 each. Prepare a contribution margin income statement for each of the three production levels given in the table.
c. Calculate Ramada’s break-even point in number of units and in sales revenue. Ramada sells its carts for $1,650 each.
d. Assume Ramada sold 200 carts last year. Without performing any calculations, determine whether Ramada earned a profit last year.
e. Calculate the number of carts that Ramada must sell to earn $28,500 profit. Ramada sells its carts for $1,650 each.
f. Calculate Ramada’s degree of operating leverage if it sells 550 carts. Ramada sells its carts for $1,650 each.
g. Using the degree of operating leverage, calculate the change in Ramada’s profit if sales are 15 percent less than expected.