Question
Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $284,600 $760,000 Variable costs 114,200 456,000 Contribution margin $170,400 $304,000
Beck Inc. and Bryant Inc. have the following operating data:
| Beck Inc. | Bryant Inc. | |||
| Sales | $284,600 | $760,000 | ||
| Variable costs | 114,200 | 456,000 | ||
| Contribution margin | $170,400 | $304,000 | ||
| Fixed costs | 99,400 | 114,000 | ||
| Income from operations | $71,000 | $190,000 | ||
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 increases of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher operating leverage means that its fixed costs are a larger percentage of contribution margin than are Bryant Inc.'s.
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Day Trading Strategies And Risk Management
Authors: Richard N. Williams
1st Edition
979-8863610528
