Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(2 points) Bruins Company incurs variable costs of 30% of sales and fixed costs of $315,000. If the company's margin of safety is $115,000, what

(2 points) Bruins Company incurs variable costs of 30% of sales and fixed costs of

$315,000. If the company's margin of safety is $115,000, what is the company's

operating leverage? (Round your answer to two decimal places)

a. 2.74

b. 0.37

c. 4.91

d. 2.26

e. 10.13

f. 2.91

g. 3.74

h. None of the above.

This is what I have done..Please tell me where I messed up

x=sales

variable costs= 0.3x

FC=315,000

x - .3x - 315,000 = 115,000

x - 0.3x =430,000

x = 1,433,333.33(sales)

Plus that in the equation above for x and get contribution margin of 1,003,333. then solve for operating Leverage 1,003,333(CM) / 688,333(Operating Income)

I know its wrong. But this is how I approached the problem.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Accounting Chapters 1-13

Authors: John Price, M David Haddock, Michael Farina

13th Edition

007743062X, 9780077430627

More Books

Students also viewed these Accounting questions