Gutsen Communications Inc

question 122

Multiple Choice

Gutsen Communications Inc.manufactures a scrambling device for cellular phones.The main component of the scrambling device is a very delicate part - DTV-12.DTV-12 requires careful handling during manufacturing.Once damaged,the part must be discarded.Only skilled laborers are hired to manufacture and install DTV-12.Damages still occur,however.The following are the operating data of Gutsen Communications Inc.for 2010 and 2011 relative to the insertion of DTV-12.Round calculations to two significant digits.
The partial operational productivity ratio of DTV-12 in 2011 is:

• A)0.63 per unit.
• B)0.73 per unit.
• C)1.92 per unit.
• D)3.00 per unit.
• E)3.33 per unit.

Comprehend the use of the degree of operating leverage and how it affects net operating income in response to sales changes.

Evaluate the effect of changes in marketing strategies, including advertising budget adjustments and sales commissions, on net operating income.

Determine the margin of safety in both dollar terms and units.

Appreciate the impact of incorporating new components or features on product costs and monthly sales.

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