Question

Beck Inc. and Bryant Inc. have the following operating data:

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a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.

Beck Inc.: (                          )
Bryant Inc. :(                         )

b. How much would income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number.

	Dollars	Percentage
Beck Inc.	$	%
Bryant Inc.	$	%

Answer 1

Compute the operating leverage for Bk Inc and By Inc: Bk Inc. Leverage Income Fr Contribution Margin $500,000 $100,000 By Inc Contribution Margin $750,000 $300,000 Operating Leverage -2.5 Hence, operating leverage for Bk Inc. is 5 and operating leverage for By Inc. is 2.5

Calculate increase in income from operations if sales increase by 20%; Particulars Bk Inc.By Inc Sales @ 20% increase 1,500,000 2,400,000 Less: Variable Costs a 20% Increase l 900,0001 1,500,000 600,000 900,000 400,000 450,000 Income From Operations After 20% | 200,000| 450,000 Less: Fxed Costs Increase in Sales Less: Income From Operations efore Increase) Increase in Income From Percentage Increase 100000 300,000 00,000 150,000 50% 100% Hence, income from operations increases by $100,000 for Bk Inc. and $150,000 for By.Inc.l