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Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $222,400 $594,000 Variable costs (89,200) (356,400) Contribution margin $133,200 $237,600
Beck Inc. and Bryant Inc. have the following operating data:
Beck Inc. | Bryant Inc. | |||
Sales | $222,400 | $594,000 | ||
Variable costs | (89,200) | (356,400) | ||
Contribution margin | $133,200 | $237,600 | ||
Fixed costs | (59,200) | (39,600) | ||
Operating income | $74,000 | $198,000 |
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 operating income increase for each company if the sales of each increased by 10%? If required, round answers to nearest whole number.
Dollars | Percentage | ||
Beck Inc. | $ | % | |
Bryant Inc. | $ | % |
c. The difference in the of operating income 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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