Use the Information Below to Answer the Following Questions -Refer to the Table Above

question 26

Multiple Choice

Use the information below to answer the following questions.
Unique Tables manufacture coffee tables made of recycled timber. Market research has suggested that there will be strong demand for the tables. Due to this, management is debating whether to lease a new turning machine to meet increased production. To assist in their decision-making, the management accountant has supplied the following information:
$\begin{array}{lll}&\text { Without }&\text { With }\\&\text { turning machine }&\text { turning machine }\\\text { Expected level of sales } & 1500 \text { units } & 1500 \text { units } \\\text { Sales price per unit } & \$ 150 & \$ 150 \\\text { Variable costs per unit } & \$ 120 & \$ 110 \\\text { Fixed costs } & \$ 7,500 & \$ 15,000\end{array}$
-Refer to the table above. The operating gearing for Unique Tables is:

• A)higher with the turning machine.
• B)higher without the turning machine.
• C)insignificant.
• D)Equal in both cases

---

Definitions:

Sales

The total revenue earned from the sale of goods or services related to a company's primary operations.

Manufacturing Cycle Efficiency

A measure of the efficiency of the production process, calculated as value-added time divided by the total cycle time.

Value-added Time

The period during which a product or service is being modified or enhanced to increase its value to the customer.

Residual Income

Residual income is the amount of income that an individual or business has after all personal debts and expenses, including a mortgage, have been paid.