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opontable than the regrar burgers. P2-2 COMPARING CONTRIBUTION-MARGIN PERCENTAGES Below are actual state- ments of operating income for Microsoft and Procter&Gamble (in millions): Microsoft Revenues
opontable than the regrar burgers. P2-2 COMPARING CONTRIBUTION-MARGIN PERCENTAGES Below are actual state- ments of operating income for Microsoft and Procter&Gamble (in millions): Microsoft Revenues Cost of revenue Research and development Sales and marketing $60,420 11,598 8,164 13,039 5,127 $22,492 Procter & Gamble Net sales Cost of products sold Selling, general, and administrative $83,503 40,695 25,725 expenses Operating income General and administrative $17,083 Operating income Assume that the only variable cost for Microsoft is "cost of revenue" and for Procter& Gamble it is "cost of products sold.'" 1. Compute the contribution-margin percentage of Microsoft and that of Procter & Gamble. Why do you suppose the percentages are so different? operating income for each company ing income of changes in sales volume. What assumptions do you make in forming such a 2. Suppose each company increases its revenue by $10 million. Compute the increase in 3. Explain how the contribution-margin percentage helps you predict the effects on operat- prediction
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