Data Table $ 82,300 40,400 CRH Tech Revenues Cost of revenue Research and development Sales and Marketing General and administrative Operating income $ 62,700 9,100 8,180 12,860 5,135 Heider and Rouse Net sales Cost of products sold Selling, general, and administrative expenses Operating income 24,700 $ 17,200 $ 27,425 Print Done Below are actual statements of operating income for CRH Tech and Heider and Rouse (in millions): Click the icon to view the actual statements of operating income.) Assume that the only variable cost for CRH Tech is "cost of revenue" and for Heider and Rouse the only variable is "cost of products sold." Requirements 1. Compute the contribution-margin percentage of CRH Tech and that of Heider and Rouse. Why do you suppose the percentages are so different? 2. Suppose each company increases its revenue by S11 million. Compute the increase in operating income for each company. 3. Explain how the contribution margin percentage helps you predict the effects on operating income of changes in sales volume. What assumptions do you make in forming such a prediction? Requirement 1. Begin by determining the formula to compute the contribution-margin percentage, then enter the amounts in the formula to compute the contribution-margin percentage of CRH Tech and that of Heider and Rouse. (Round the percentages to the nearest whole percent.) Contribution margin Revenues (Net sales) = Contribution-margin percentage CRH Tech 53,600 62.700 = 85 % Heider and Rouse 41,900 82.300 51 % Why do you suppose the percentages are so different? There is variable cost for each unit of software sold by CRH Tech. The variable cost of the soap, cosmetics, foods, and other products of Heider and Rouse is Requirement 2. Begin by determining the formula to compute the increase in operating income for each company. (Enter your answers in dollars, not millions.) Increase in operating income CRH Tech's operating income would increase by $ Heider and Rouse's oneratina income would increase hush Below are actual statements of operating income for CRH Tech and Heider and Rouse (in millions): B (Click the icon to view the actual statements of operating income.) Assume that the only variable cost for CRH Tech is "cost of revenue" and for Heider Rouse the only variable is "cost of products sold." Requirements 1. Compute the contribution-margin percentage of CRH Tech and that of Heider and Rouse. Why do you suppose the percentages are so different? 2. Suppose each company increases its revenue by $11 million. Compute the increase in operating income for each company. 3. Explain how the contribution margin percentage helps you predict the effects on operating income changes in sales volume. What assumptions do you make in forming such a prediction? Heider and Rouse 41,900 82,300 51 % Why do you suppose the percentages are so different? There is variable cost for each unit of software sold by CRH Tech. The variable cost of the soap, cosmetics, foods, and other products of Heider and Rouse is Requirement 2. Begin by determining the formula to compute the increase in operating income for each company. (Enter your answers in dollars, not millions.) Increase in operating income CRH Tech's operating income would increase by $ Heider and Rouse's operating income would increase by $ Requirement 3. Explain how the contribution margin percentage helps you predict the effects on operating income of changes in sales volume. What assumptions do you make in forming such a prediction? the volume outside the relevant range, we know that the total contribution margin generated by any added sales be added to the operating income. The main assumptions, then, are that By assuming that changes in sales volume total fixed costs change and unit variable cost
