Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sales Sales Sales Variable costs Amount $170,000 85,000 100% 50 Amount $170,000 51,000 100% 30 70% Contribution margin Fixed costs $ 85,000 23,800 $119,000 50,800

image text in transcribed

Sales Sales Sales Variable costs Amount $170,000 85,000 100% 50 Amount $170,000 51,000 100% 30 70% Contribution margin Fixed costs $ 85,000 23,800 $119,000 50,800 Operating profit $61,200 $ 68,200 Required: 1-a. Calculate the degree of operating leverage (DOL) for each company. (Round your answers to 3 decimal places.) Company A Company B Degree of operating leveragee 1-b. If sales increase from the present level, which company benefits more? Company A Company B 2. Assume that sales rise 15% 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%)) Company A Company B Increase in profit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Computer Aided Fraud Prevention And Detection A Step By Step Guide

Authors: David Coderre

1st Edition

0470392436, 978-0470392430

More Books

Students also viewed these Accounting questions

Question

5. List the forces that shape a groups decisions

Answered: 1 week ago

Question

4. Identify how culture affects appropriate leadership behavior

Answered: 1 week ago