Question
Shown here are condensed income statements for two different companies (both are organized as LLCs and pay no income taxes). Miller Company Sales $ 1,100,000
Shown here are condensed income statements for two different companies (both are organized as LLCs and pay no income taxes).
Miller Company | ||
Sales | $ | 1,100,000 |
Variable expenses (80%) | 880,000 | |
Income before interest | 220,000 | |
Interest expense (fixed) | 72,000 | |
Net income | $ | 148,000 |
Weaver Company | ||
Sales | $ | 1,100,000 |
Variable expenses (60%) | 660,000 | |
Income before interest | 440,000 | |
Interest expense (fixed) | 292,000 | |
Net income | $ | 148,000 |
1. Compute times interest earned for Miller Company.
2. Compute times interest earned for Weaver Company.
3. What happens to each company's net income if sales increase by 50%. (Round your answers to nearest whole percent.)
4. What happens to each company's net income if sales increase by 60%? (Round your answers to nearest whole percent.)
5. What happens to each company's net income if sales increase by 90%? (Round your answers to nearest whole percent.)
6. What happens to each company's net income if sales decrease by 20%? (R
. What happens to each company's net income if sales decrease by 30%? (Round your answers to nearest whole percent.)
8. What happens to each company's net income if sales decrease by 40%?
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