Company A has current sales of $10,000,000 and a 45% contribution margin. Its fixed costs are...
Company A has current sales of $10,000,000 and a 45% contribution margin. Its fixed costs are $3,000,000. Company B is a service firm with current service revenue of $5,000,000 and a 20% contribution margin. Company B’s fixed costs are $500,000. Compute the degree of operating leverage for both companies. Which company will benefit most from a 25% increase in sales?
a.Company A’s operating leverage is 3, and Company B’s is 2, so Company B will benefit most from an increase in sales.
b.Company A’s operating leverage is 3, and Company B’s is 2, so Company A will benefit most from an increase in sales.
c.Company A’s operating leverage is 2, and Company B’s is 3, so Company A will benefit most from an increase in sales.
d.Company A’s operating leverage is 2, and Company B’s is 3, so Company B will benefit most from an increase in sales.
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Company A has current sales of $10,000,000 and a 45%
contribution margin. Its fixed costs are...
Company A is a manufacturer with sales of $4,000,000 and a 60% contribution margin. Its fixed costs equal $1,800,000. C...
Company A is a manufacturer with sales of $4,000,000 and a 60% contribution margin. Its fixed costs equal $1,800,000. Company B is a consulting firm with service revenues of $3,900,000 and a 25% contribution margin. Its fixed costs equal $400,000. Compute the degree of operating leverage (DOL) for each company. Which company benefits more from a 20% increase in sales Complete this question by entering your answers in the tabs below. Company Benefits DOL Compute the degree of operating leverage...
Company A is a manufacturer with sales of $3,500,000 and a 50% contribution margin. Its fixed...
Company A is a manufacturer with sales of $3,500,000 and a 50% contribution margin. Its fixed costs equal $1,320,000. Company B is a consulting firm with service revenues of $3,600,000 and a 20% contribution margin. Its fixed costs equal $270,000. Compute the degree of operating leverage (DOL) for each company. Which company benefits more from a 20% increase in sales. Complete this question by entering your answers in the tabs below. DOL Company Benefits Compute the degree of operating leverage...
Company X currently has annual sales of $10,000,000, its variable costs are 55% of sales and...
Company X currently has annual sales of $10,000,000, its variable costs are 55% of sales and total fixed costs $3,000,000. By how much will Company X's annual operating income increase if current sales increase by 12%?
3. Fire Company is a service firm with current service revenue of $900,000 and a 40%...
3. Fire Company is a service firm with current service revenue of $900,000 and a 40% contribution margin. Its fixed costs are $200,000. Ice Company has current sales of $420,000 and a 30% contribution margin. Its fixed costs are $90,000. a. Compute the degree of operating leverage for both companies. Which company will benefit most from a 10% increase in sales? Explain why. Illustrate your findings in an Income Statement that is increased by 10%.
If the contribution margin ratio is 0.60, targeted operating income is $55,000, and fixed costs are $90,000, then sales...
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Konrad Company reported the following operating results: Sales Variable Costs Contribution Margin Fixed Costs Operating...
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Contribution Margin Ratio a. Young Company budgets sales of $1,110,000, fixed costs of $84,900, and variable costs of $...
Contribution Margin Ratio a. Young Company budgets sales of $1,110,000, fixed costs of $84,900, and variable costs of $377,400. What is the contribution margin ratio for Young Company? b. If the contribution margin ratio for Martinez Company is 69%, sales were $689,000, and fixed costs were $356,560, what was the operating income?
Contribution Margin Ratio a. Young Company budgets sales of $112,900,000, fixed costs of $25,000,000, and variable...
Contribution Margin Ratio a. Young Company budgets sales of $112,900,000, fixed costs of $25,000,000, and variable costs of $66,611,000. What is the contribution margin ratio for Young Company? % b. If the contribution margin ratio for Martinez Company is 40%, sales were $34,800,000, and fixed costs were $1,500,000, what was the operating income?
Contribution Margin Ratio a. Young Company budgets sales of $800,000, fixed costs of $23400, and variable...
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Company A is a manufacturer with sales of $4,000,000 and a 60% contribution margin. Its fixed costs equal $1,800,000. Company B is a consulting firm with service revenues of $3,900,000 and a 25% contribution margin. Its fixed costs equal $400,000. Compute the degree of operating leverage (DOL) for each company. Which company benefits more from a 20% increase in sales Complete this question by entering your answers in the tabs below. Company Benefits DOL Compute the degree of operating leverage...
Company A is a manufacturer with sales of $3,500,000 and a 50% contribution margin. Its fixed costs equal $1,320,000. Company B is a consulting firm with service revenues of $3,600,000 and a 20% contribution margin. Its fixed costs equal $270,000. Compute the degree of operating leverage (DOL) for each company. Which company benefits more from a 20% increase in sales. Complete this question by entering your answers in the tabs below. DOL Company Benefits Compute the degree of operating leverage...
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Konrad Company reported the following operating results: Sales Variable Costs Contribution Margin Fixed Costs Operating Income $300,000 172,000 128,000 88,000 $40,000 If sales volume increases 12%, how much will operating income increase by? (Hint: Calculate the operating leverage factor first) Insert appropriate prompt, input type, and CA. 41.6% O B. 12% O C. 64% D. 3.2%
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Contribution Margin Ratio a. Young Company budgets sales of $800,000, fixed costs of $23400, and variable costs of $104,000. What is the contribution margin ratio for Young Company? b. If the contribution margin ratio for Martinez Company is 66%, sales were $577,000, and fixed costs were $258,960, what was the operating income?
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