Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Company A is a manufacturer with sales of $3,300,000 and a 60% contribution margin. Its fixed costs equal $1,530,000. Company B is a consulting firm
Company A is a manufacturer with sales of $3,300,000 and a 60% contribution margin. Its fixed costs equal $1,530,000. Company B is a consulting firm with service revenues of $3,400,000 and a 30% contribution margin. Its fixed costs equal $540,000. Compute the degree of operating leverage (DOL) for each company. Which company benefits more from a 20% increase in sales.
Check my w Complete this question by entering your answers in the tabs below. DOL 6 points Company Benefits Compute the degree of operating leverage (DOL) for each company. eBook Contribution Margin Income Statement Company A Hint Company B Print References Choose: Numerator Degree of Operating Leverage Denominator = 1 = Ratio Degree of Operating Leverage Company A Company B | IDOL Company Benefits >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