Question
Operating Leverage SunRise Inc. and SunSet Inc. have the following operating data: SunRise Inc. SunSet Inc. Sales $240,500 $780,000 Variable costs (96,500) (468,000) Contribution margin
Operating Leverage
SunRise Inc. and SunSet Inc. have the following operating data:
| SunRise Inc. | SunSet Inc. | |||
| Sales | $240,500 | $780,000 | ||
| Variable costs | (96,500) | (468,000) | ||
| Contribution margin | $144,000 | $312,000 | ||
| Fixed costs | (99,000) | (192,000) | ||
| Operating income | $45,000 | $120,000 | ||
a. Compute the operating leverage for SunRise Inc. and SunSet Inc. Round the answers to one decimal place.
| SunRise Inc. | |
| SunSet Inc. |
b. How much would operating income increase for each company if the sales of each increased by 20%?
| Dollars | Percentage | |
|---|---|---|
| SunRise Inc. | $ | % |
| SunSet Inc. | $ | % |
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Accounting for Non-Accounting Students
Authors: John R. Dyson
8th Edition
273722972, 978-0273722977
