Question
Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $390,100 $1,072,500 Variable costs 156,500 643,500 Contribution margin
Operating Leverage
Beck Inc. and Bryant Inc. have the following operating data:
| Beck Inc. | Bryant Inc. | |||
| Sales | $390,100 | $1,072,500 | ||
| Variable costs | 156,500 | 643,500 | ||
| Contribution margin | $233,600 | $429,000 | ||
| Fixed costs | 160,600 | 234,000 | ||
| Income from operations | $73,000 | $195,000 | ||
a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.
| Beck Inc. | |
| Bryant Inc. |
b. How much would income from operations increase for each company if the sales of each increased by 10%? If required, round answers to nearest whole number.
| Dollars | Percentage | ||
| Beck Inc. | $ | % | |
| Bryant Inc. | $ | % | |
c. The difference in the of income from operations is due to the difference in the operating leverages. Beck Inc.'s operating leverage means that its fixed costs are a percentage of contribution margin than are Bryant Inc.'s.
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Accounting Act Count Think
Authors: Raad Press
1st Edition
979-8643677666
