Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Company A is a manufacturer with current sales of $3,600,000 and a 60% contribution margin. Its fixed costs equal $1,740,000. Company B is a consulting
Company A is a manufacturer with current sales of $3,600,000 and a 60% contribution margin. Its fixed costs equal $1,740,000. Company B is a consulting firm with current service revenues of $3,700,000 and a 25% contribution margin. Its fixed costs equal $480,000. Compute the degree of operating leverage (DOL) for each company. rg CompanyA Company B Sales Variable costs Contribution margin Fixed costs Pretax income Degree of Operating Leverage Choose: Numerator Denominator Ratio Contribution margin ratio Degree of Operating Leverage Company A Company B
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started