Titus Comp. produces lamps and mirrors

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Titus Comp. produces lamps and mirrors. The company's external income statements for the last two years are given below: 
2012 2013 2014? 
Units Sold 145,000 185,000 
Sales Revenue $ 2,160,000 $ 2,700,000 
Cost of Goods Sold 1,358,000 1,718,000 
Gross Margin 802,000 982,000 
S, G & A 210,000 210,000 
Net Operating Income $ 592,000 $ 772,000 

The company has no beginning or ending inventories. Manufacturing costs are mixed, while S,G&A costs are strictly fixed. 
Required: 
1. Use the “high-low” method to estimate the variable manufacturing cost per unit and the total fixed manufacturing cost. 
Variable Mfg. cost per unit (2 points) = 
Total Fixed Mfg. costs (2 points) = 

2. How much total contribution margin was earned in 2012 year (3 points)? 
3. What was the degree of operating leverage in 2013 (3 points)? 
4. If sales increase by 10% from 2013 to 2014, how much net operating income will the company earn in 2014 (2 points)? 

5. Assume that total assets decreased from $15,000,000 to $10,000,000 during 2013. The company’s minimum acceptable rate of return is 5%. Compute the following for 2013 (4 points): 

Return on Sales = 
Investment Turnover = 
Return on Investment = 
Residual Income = 

    • 10 years ago
    Titus Comp. produces lamps and mirrors
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