Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $370,700 $1,188,000 Variable costs 148,700 712,800 Contribution margin $222,000 $475,200

Beck Inc. and Bryant Inc. have the following operating data:

Beck Inc. Bryant Inc.
Sales $370,700 $1,188,000
Variable costs 148,700 712,800
Contribution margin $222,000 $475,200
Fixed costs 148,000 277,200
Income from operations $74,000 $198,000

a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.

Beck Inc. fill in the blank 1
Bryant Inc. fill in the blank 2

b. How much would income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number.

Dollars Percentage
Beck Inc. $fill in the blank 3 fill in the blank 4 %
Bryant Inc. $fill in the blank 5 fill in the blank 6 %

c. The difference in the

increasesdecreases

of income from operations is due to the difference in the operating leverages. Beck Inc.'s

higherlower

operating leverage means that its fixed costs are a

largersmaller

percentage of contribution margin than are Bryant Inc.'s.

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

Financial Accounting

Authors: Bev Vickerstaff, Parminder Johal

1st Edition

1444170414, 978-1444170412

More Books

Students also viewed these Accounting questions