Answered step by step
Verified Expert Solution
Question
1 Approved Answer
i only need help with question E,F,G,H,I , thank you HighTech Inc. and OldTime Co. compete within the same industry and had the following operating
i only need help with question E,F,G,H,I , thank you
HighTech Inc. and OldTime Co. compete within the same industry and had the following operating results in 2019: Sales Variable expenses Contribution margin Fixed expenses Operating income HighTech Inc. $3,000,000 600,000 $2,400,000 1,940,000 $ 460,000 oldTime Co. $3,000,000 1,800,000 $1,200,000 740,000 $ 460,000 Required: a. Calculate the breakeven point for each firm in terms of revenue. b. What observations can you draw by examining the breakeven point of each firm given that they earned an equal amount of operating income on identical sales volumes in 2019? c. Calculate the amount of operating income (or loss) that you would expect each firm to report in 2020 if sales were to 1. Increase by 20%. 2. Decrease by 20%. d. Using the amounts computed in requirement c, calculate the increase or decrease in the amount of operating income expected in 2020 from the amount reported in 2019. e. Explain why an equal percentage increase (or decrease) in sales for each firm would have such differing effects on operating income. f. Calculate the ratio of contribution margin to operating income for each firm in 2019. g. Multiply the expected increase in sales of 20% for 2020 by the ratio of contribution margin to operating income for 2019 computed in requirement f for each firm. h. Multiply your answer in requirement g by the operating income of $460,000 reported in 2019 for each firm. i. Compare your answer in requirement h with your answer in requirement d. What conclusions can you draw about the effects of operating leverage from the steps you performed in requirements f, g, and h? Required A Required B Required C1 Required C2 Required D Required E Required F Required G Funtain whuan anual narrantana incredea for darroan 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