Question

Moses Moonrocks Inc. has developed a balanced scorecard with a measure map that suggests that the number of erroneous shipments has a direct effect on operating profit. The company estimates that every shipment error leads to a reduction of revenue by $3,000 and increased costs of about $2,000.

Sales $230,000
Cost of goods sold 150,000
Depreciation expense 30,000
Other expenses 20,000

Answer 1

6

Step-by-step explanation:

The computation of the shipping errors in the case of break even is given below;

But before that the net operating income is

Sales $230,000

Less: Cost of goods sold 150,000

Less: Depreciation expense 30,000

Less: Other expenses 20,000

Net operating income $30,000

Now the shipping errors is

= $30,000 ÷ ($3,000 + $2,000)

= 6