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Please show your work, I will need to know how to compute this. The following sales and cost data (000s) are for two companies in
Please show your work, I will need to know how to compute this.
The following sales and cost data (000s) are for two companies in the transportation industry: Sales Variable costs Company A Percent of Amount Sales $160,000 100% 80,000 50 Company B Percent of Amount Sales $160,000 100% 32,000 20 Contribution margin Fixed costs $ 80,000 28,000 $128,000 53,000 Operating profit $ 52,000 50% 80% $ 75,000 Required: 1-a. Calculate the degree of operating leverage (DOL) for each company. (Round your answers to 3 decimal places.) 1-b. If sales increase from the present level, which company benefits more? Company A Company B 2. Assume that sales rise 10% in the next year but that everything else remains constant. Calculate the percentage increase in profit for each company. (Do not round intermediate calculations. Input your answers as whole percentages rounded to two decimal places (i.e., .1567 = 15.67%))Step by Step Solution
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