PLEASE ANSWER THE QUESTIONS IN THE EXACT FORMAT LISTED AND SHOW ALL WORK FOR CALCULATIONS

Arnold Vimka is a venture capitalist facing two alternative investment opportunities. He intends to invest $1 million in a start-up firm. He is nervous, however, about future economic volatility. He asks you to analyze the following financial data for the past years operations of the two firms he is considering and give him some business advice.

	Company Name
	Larson				Benson
Variable cost per unit (a)	$	18.00			$	9.00
Sales revenue (8,300 units $31.00)	$	257,300			$	257,300
Variable cost (8,300 units a)		(149,400	)			(74,700	)
Contribution margin	$	107,900			$	182,600
Fixed cost		(24,400	)			(99,100	)
Net income	$	83,500			$	83,500

Required

Use the contribution margin approach to compute the operating leverage for each firm.

If the economy expands in coming years, Larson and Benson will both enjoy a 11 percent per year increase in sales, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units increases, both revenue and variable cost will increase.)

If the economy contracts in coming years, Larson and Benson will both suffer a 11 percent decrease in sales volume, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units increases, both revenue and variable cost will increase.)

Complete this question by entering your answers in the tabs below.

Required A

Required B

Required C

Use the contribution margin approach to compute the operating leverage for each firm. (Round your answers to 2 decimal places.)

Company Name	Larson	Benson
Operating leverage

Complete this question by entering your answers in the tabs below.

Required A

Required B

Required C

If the economy expands in coming years, Larson and Benson will both enjoy a 11 percent per year increase in sales, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units increases, both revenue and variable cost will increase.) (Negative values should be indicated with a minus sign. Round Percentage change to 2 decimal places.)

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	Company Name
	Larson		Benson
Variable cost per unit	$18.00		$9.00
Sales revenue
Variable cost
Contribution margin
Fixed cost
Net income
Percentage change		%		%

Complete this question by entering your answers in the tabs below.

Required A

Required B

Required C

If the economy contracts in coming years, Larson and Benson will both suffer a 11 percent decrease in sales volume, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units decreases, both total revenue and total variable cost will decrease.) (Negative values should be indicated with a minus sign. Round Percentage change to 2 decimal places.)

show less

	Company Name
	Larson		Benson
Variable cost per unit	$18.00		$9.00
Sales revenue
Variable cost
Contribution margin
Fixed cost
Net income
Percentage change		%		%

Complete this question by entering your answers in the tabs below.

If the economy contracts in coming years, Larson and Benson will both suffer a 11 percent decrease in sales volume, assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. (Note: Since the number of units decreases, both total revenue and total variable cost will decrease.) (Negative values should be indicated with a minus sign. Round Percentage change to 2 decimal places.)

	Company Name
	Larson		Benson
Variable cost per unit	$18.00		$9.00
Sales revenue
Variable cost
Contribution margin
Fixed cost
Net income
Percentage change		%		%