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The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.35 and fixed costs of $60,500.
The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.35 and fixed costs of $60,500. Every dollar of sales contributes 35 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 0.65 and fixed costs of $605,000. Every dollar of sales contributes 65 cents toward fixed costs and profit. Both companies have sales of $1,210,000 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 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 A Required B >
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