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Spring Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.45 and fixed costs of $103,500. Every dollar of sales
Spring Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.45 and fixed costs of $103,500. Every dollar of sales contributes 45 cents toward fixed costs and profit. The cost structure of a competitor, Winters Company, is dominated by fixed costs with a higher contribution margin ratio of 0.80 and fixed costs of $345.000. Every dollar of sales contributes 80 cents toward fixed costs and profit. Both companies have sales of $690,000 per month. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 15 percent increase in sales volume. By how much would each company's profits increase? Complete this question by entering your answers in the tabs below. Required A Required B Compare the two companies' cost structures. SPRING COMPANY Amount Percentage WINTERS COMPANY Amount Percentage Sales % % Variable cost Contribution margin Fixed costs % % Operating profit %
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