Concept explainers
(a)
Concept introduction:
Breakeven Point:
The level of sales where the company is neither on profit nor loss is termed as breakeven point. In other words, that level of sales at which the fixed cost of the business is recovered.
The breakeven point in units before and after the automation.
(b)
Concept introduction:
Degree of operating leverage:
The degree of oprating leverage refers to the level of fixed cost incurred for operating the business, and the higher leverage means there ia a high fixed cost. It is computed by dividing the contribution margin with net operating income.
The degree of operating leveragebefore and after the automation.
(c)
Concept introduction:
Degree of operating leverage:
The degree of oprating leverage refers to the level of fixed cost incurred for operating the business and the higher leverage means there is a high fixed cost. It is computed by dividing the contribution margin with net operating income.
The meaning of degree of operating leverage computed in above part.
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Managerial Accounting
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