Ch 11 HW Saved 2 Problem 11-27A (Algo) Analyzing operating leverage LO 11-3, 11-4 Arnold Vimka is a venture capitalist facing two alternative investment opportunities. He intends to invest $1 million in a start-up firm. He 5 s nervous, however, about future economic volatility. He asks you to analyze the following financial data for the past year's operations points of the two firms he is considering and give him some business advice Company Name . Larson Benson Variable cost per unit (a) $ 18.00 00'6 $ Book Sales revenue (8, 300 units x $29.00) $ 240, 700 $240, 700 Variable cost (8, 300 units x a) (74, 700 Contribution margin $ 91, 300 $166, 000 Fixed cost (24,000) (98, 700) Print Net income $ 67, 300 $ 67, 300 References Required a. Use the contribution margin approach to compute the operating leverage for each firm. b. If the economy expands in coming years, Larson and Benson will both enjoy a 12 percent per year increase in sales, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units increases, both revenue and variable cost will increase.) . If the economy contracts in coming years, Larson and Benson will both suffer a 12 percent decrease in sales volume, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units decreases, both total revenue and total variable cost will decrease.) Complete this question by entering your answers in the tabs below. Required A Required B Required C If the economy expands in coming years, Larson and Benson will both enjoy a 12 percent per year increase in sales, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units increases, both revenue and variable cost will increase.) (Round "Percentage" answer to 2 decimal place (i.e., .2345 should be entered as 23.45). Round final answers to nearest whole dollar.) Show less A Company Name Larson Benson Hill W 53'F Sunny Type here to searchSaved 2 TIMEU LUSL 1 2 4 , VOU1 1 30 , 1 00 1 Net income $ 67, 300 $ 67, 300 Required 5 points a. Use the contribution margin approach to compute the operating leverage for each firm. b. If the economy expands in coming years, Larson and Benson will both enjoy a 12 percent per year increase in sales, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note. Since the number of units increases, both revenue and variable cost will increase.) Book c. If the economy contracts in coming years, Larson and Benson will both suffer a 12 percent decrease in sales volume, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units decreases, both total revenue and total variable cost will decrease.) Print Complete this question by entering your answers in the tabs below. References Required A Required B Required C If the economy expands in coming years, Larson and Benson will both enjoy a 12 percent per year increase in sales, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units increases, both revenue and variable cost will increase. ) (Round "Percentage" answer to 2 decimal place (i.e., .2345 should be entered as 23.45). Round final answers to nearest whole dollar.) Show less A Company Name Larson Benson Variable cost per unit $ 18.00 $ 9.00 Sales revenue Variable cost Contribution margin Fixed cost Net income Percentage change O 53OF Sunny Type here to searchRequired 5 points a. Use the contribution margin approach to compute the operating leverage for each firm. b. If the economy expands in coming years, Larson and Benson will both enjoy a 12 percent per year increase in sales, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note. Since the number of units increases, both revenue and variable cost will increase.) eBook c. If the economy contracts in coming years, Larson and Benson will both suffer a 12 percent decrease in sales volume, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units decreases, both total revenue and total variable cost will decrease.) Print In Complete this question by entering your answers in the tabs below. References Required A Required B Required C If the economy contracts in coming years, Larson and Benson will both suffer a 12 percent decrease in sales volume, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units decreases, both total revenue and total variable cost will decrease.) (Round "Percentage" answer to 2 decimal place (i.e., .2345 should be entered as 23.45). Round final answers to nearest whole dollar.) Show less Company Name Larson Benson Variable cost per unit $ 18.00 $ 9.00 Sales revenue Variable cost Contribution margin Fixed cost Net income Percentage change % w 53'F Sunny O Type here to search3 Exercise 11-19A (Algo) Margin of safety LO 11-6 5 Information concerning a product produced by Ender Company appears here: points Skipped Sales price per unit 163 A tA Variable cost per unit 80 Total annual fixed manufacturing and operating costs $539 , 500 Book Required Determine the following Print a. Contribution margin per unit. b. Number of units that Ender must sell to break even. c. Sales level in units that Ender must reach to earn a profit of $273,900. References d. Determine the margin of safety in units, sales dollars, and as a percentage. Complete this question by entering your answers in the tabs below. Req A to C Req D a. Contribution margin per unit. b. Number of units that Ender must sell to break even. c. Sales level in units that Ender must reach to earn a profit of $273,900 a. Contribution margin per unit b . Break-even in units C. Sales in units Req A to C Req D > Mc Graw Type here to search O 530