Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $154,300 $392,000 Variable costs 61,900 235,200 Contribution margin $92,400 $156,800
Beck Inc. and Bryant Inc. have the following operating data:
| Beck Inc. | Bryant Inc. | |||
| Sales | $154,300 | $392,000 | ||
| Variable costs | 61,900 | 235,200 | ||
| Contribution margin | $92,400 | $156,800 | ||
| Fixed costs | 50,400 | 44,800 | ||
| Income from operations | $42,000 | $112,000 | ||
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 15%? If required, round answers to nearest whole number.
| Dollars | Percentage | ||
| Beck Inc. | $ | % | |
| Bryant Inc. | $ | % | |
c. The difference in the of income from operations is due to the difference in the operating leverages. Beck Inc.'s operating leverage means that its fixed costs are a percentage of contribution margin than are Bryant Inc.'s.
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Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
IFRS edition volume 2
978-0470613474, 470613475, 978-0470616314
