Bergen Hospital is contemplating an investment in an automated surgical system. Its current process relies on the a number of skilled physicians. The new equipment would employ a computer robotic system operated by a technician. The company requested an analysis of the old technology versus the new technology. The accounting department has prepared the following CVP income statements for use in your analysis. Old New Sales $3,000,000 $3,000,000 Variable costs 1,633,800 688,500 Contribution margin 1,366,200 2,311,500 Fixed costs 1,168,200 1,909,500 Net income $198,000 $402,000 (a) Compute the degree of operating leverage for the company under each scenario. (Round answers to 2 decimal places, e.g. 15.72.) Degree of operating leverage Old New
Bergen Hospital is contemplating an investment in an automated surgical system. Its current process relies on the a number of skilled physicians. The new equipment would employ a computer robotic system operated by a technician. The company requested an analysis of the old technology versus the new technology. The accounting department has prepared the following CVP income statements for use in your analysis. Old New Sales $3,000,000 $3,000,000 Variable costs 1,633,800 688,500 Contribution margin 1,366,200 2,311,500 Fixed costs 1,168,200 1,909,500 Net income $198,000 $402,000 (a) Compute the degree of operating leverage for the company under each scenario. (Round answers to 2 decimal places, e.g. 15.72.) Degree of operating leverage Old New
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 17E: Deepa Dalal opened a free-standing radiology clinic. She had anticipated that the costs for the...
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