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Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $210,400 $561,000 Variable costs 84,400 336,600 Contribution margin

Operating Leverage

Beck Inc. and Bryant Inc. have the following operating data:

Beck Inc. Bryant Inc.
Sales $210,400 $561,000
Variable costs 84,400 336,600
Contribution margin $126,000 $224,400
Fixed costs 56,000 37,400
Income from operations $70,000 $187,000

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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