Question
Contribution margin income statements for two competing companies are provided below: Revenue Less variable costs Contribution margin Less fixed costs Net income Yin Company Yang
Contribution margin income statements for two competing companies are provided below: Revenue Less variable costs Contribution margin Less fixed costs Net income Yin Company Yang Company $750,000 $750,000 337,500 562,500 $412,500 $187,500 371,250 150,000 $41,250 $37,500 Required
a. Show each company's cost structure by inserting the percentage of the company's revenue represented by each item on the contribution margin income statement.
b. Compute each company's magnitude of operating leverage.
c. Using the operating leverage measures computed in requirement b, determine the increase in each company's net income (percentage and amount) if each company experiences a 10 percent increase in sales.
d. Assuming that sales are expected to continue to increase for
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