Question
The CVP income statements shown below are available for Sheridan Company and Bonita Company. Sheridan Co. Bonita Co. Sales $490,000 $490,000 Variable costs 247,000 45,000
The CVP income statements shown below are available for Sheridan Company and Bonita Company.
Sheridan Co. | Bonita Co. | |||
Sales | $490,000 | $490,000 | ||
Variable costs | 247,000 | 45,000 | ||
Contribution margin | 243,000 | 445,000 | ||
Fixed costs | 143,000 | 345,000 | ||
Net income | $100,000 | $100,000 |
(a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e.g. 1.15.)
Degree of Operating Leverage | ||
Sheridan | ||
Bonita |
(b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for each company.
Sheridan Company | Bonita Company | |||
Selling ExpensesFixed CostsTotal Variable ExpensesGross ProfitVariable CostsTotal Fixed ExpensesCost of Goods SoldSales RevenueAdministrative ExpensesContribution MarginNet Income/(Loss) | $ | $ | ||
Sales RevenueSelling ExpensesContribution MarginNet Income/(Loss)Cost of Goods SoldGross ProfitVariable CostsFixed CostsAdministrative ExpensesTotal Fixed ExpensesTotal Variable Expenses | ||||
Net Income/(Loss)Cost of Goods SoldVariable CostsAdministrative ExpensesTotal Fixed ExpensesFixed CostsGross ProfitContribution MarginTotal Variable ExpensesSelling ExpensesSales Revenue | ||||
Contribution MarginFixed CostsCost of Goods SoldAdministrative ExpensesNet Income/(Loss)Total Fixed ExpensesGross ProfitTotal Variable ExpensesSelling ExpensesSales RevenueVariable Costs | ||||
Gross ProfitFixed CostsTotal Fixed ExpensesSales RevenueVariable CostsContribution MarginAdministrative ExpensesSelling ExpensesTotal Variable ExpensesCost of Goods SoldNet Income/(Loss) | $ | $ |
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