1.Calculate the breakeven point for each firm in terms of revenue.

Break-even sales revenue

HighTech inc:

Oldtime co:

2.Calculate the amount of operating income (or loss) that you would expect each firm to report in 2020 if sales were

Increase by 20%.

Operating income (or loss)

HighTech inc:

Oldtime co:

Decrease by 20%.

Operating income (or loss)

HighTech inc:

Oldtime co:

3.Using the amounts computed in requirement 2, calculate the increase or decrease in the amount of operating income expected in 2020 from the amount reported in 2019.

Increase (decrease) with 20% sales increase:______ hightech inc._______ oldtime co.

Increase (decrease) with 20% sales decrease:______ hightech inc._______ oldtime co.

4.Calculate the ratio of contribution margin to operating income for each firm in 2019.

Ratio of contributions margin

HighTech inc.______ times

Oldtime co.______ times

5.Multiply the expected increase in sales of 20% for 2020 by the ratio of contribution margin to operating income for 2019 computed in requirement 4 for each firm.

HighTech inc.:______%

Oldtime co.:_______%

6.Multiply your answer in requirement 5 by the operating income of $360,000 reported in 2019 for each firm.

HighTech inc.:______

Oldtime co.:_______

Sales Variable expenses Contribution margin Fixed expenses Operating income HighTech Inc. $2,600,000 520,000 $2,080,000 1,720,000 $ 360,000 Old Time Co. $2,600,000 1,560,000 $1,040,000 680,000 $ 350,000