Clockworks Co Required:
(A) Calculate Clockworks' Pretax Income

question 118

Essay

Clockworks Co. reports the following data for the current year: $\begin{array} { l r } \text { Units Sold } & 1,200 \\\text { Unit Sales Price } & \$ 30 \\\text { Unit Variable Cost } & \$ 10 \\\text { Total Fixed Cost } & \$ 18,000\end{array}$
Required:
(a) Calculate Clockworks' pretax income.
(b) Calculate Clockworks' degree of operating leverage.

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Definitions:

Store Loyalty

The likelihood of customers consistently choosing one particular store or brand over competitors, often resulting from positive shopping experiences or satisfaction with products.

Habitual Purchasers

Consumers who buy the same brands or products repeatedly out of habit rather than through active decision-making based on price, quality, or other factors.

Extended Problem-Solving

A consumer decision-making process used for high involvement purchases, requiring considerable time and effort in evaluating alternatives.

Reference Group

One or more persons whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviors.