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7 Award 11.11 points VOUS High Tech Inc and Old Time Co. compete within the same industry and had the following operating results in 2019
7 Award 11.11 points VOUS High Tech Inc and Old Time Co. compete within the same industry and had the following operating results in 2019 High Tech Inc. Old Time Co Sales $2,300,000 $2,300.000 Variable expenses 460,000 1.380.000 Contribution margin $1,840.000 $ 920.000 Fixed expenses 1,570.000 650.000 Operating income $ 270,000 $ 270,000 eded Required: a. Calculate the breakeven point for each firm in terms of revenue b. What observations can you draw by examining the breakeven point of each firm given that they earned an equal amount of operating income on identical sales volumes in 2019? c. Calculeastbypoint of operating income (or loss) that you would expect each firm to report in 2020 if sales were to d. Rising the sentou computed in requirement c, calculate the increase or decrease in the amount of operating income expected in 2020 from the amount reported in 2019. e. Explain why an equal percentage increase (or decrease) in sales for each firm would have such differing effects on operating income. f. Calculate the ratio of contribution margin to operating income for each firm in 2019. g. Multiply the expected increase in sales of 20% for 2020 by the ratio of contribution margin to operating income for 2019 computed in requirement f for each firm. h. Multiply your answer in requirement g by the operating income of $270,000 reported in 2019 for each firm. i. Compare your answer in requirement h with your answer in requirement d. What conclusions can you draw about the effects of operating leverage from the steps you performed in requirements f. g, and h? Required E Required F Required G Required H Required 1 Required A Required B Required C1 Required C2 Required D Calculate the breakeven point for each firm in terms of revenue. (Do not round intermediate calculations.) Break-even sales revenue High Tech Inc. Old Time Co.
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