Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.33 and fixed costs of $74,520.
The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.33 and fixed costs of $74,520. Every dollar of sales contributes 33 cents toward fixed costs and profit. The cost structure of a competitor, Oakfield Convenience Store, is dominated by fixed costs with a higher contribution margin ratio of 0.67 and fixed costs of $596,160. Every dollar of sales contributes 67 cents toward fixed costs and profit. Both companies have sales of $1,242,000 for the year. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 10 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. Sales: Variable cost Contribution margin Fixed costs Operating profit Dennis's Retail Mart's Amount Percentage Oakfield Convenience Store Amount Percentage % % % % % % % % % % < Required B > Required A Required B Suppose that both companies experience a 10 percent increase in sales volume. By how much would each company's profits increase? Dennis's Retail Mart's profits increase by Oakfield Convenience Store's profits increase by
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started