302 A 18

Answer the following questions 

1. Cost/Benefit Analysis
a. Carler Company wants to purchase a Punch Press costing $ 50,000. Based on the company analysis, the new machine will result in a savings of $ 9,000 per year for 5 years. Calculate the Return on Investment. Show your work.

2. Payback Period
a. Using the above information what is the payback period for the Punch Press. Show your work.

3. Operating Leverage
a. Define the term fixed costs and give an example

b. Define the term variable costs and give an example

c. Define the term contribution margin and the calculation formula

d. What is the Breakeven Analysis formula?