The following CVP income statements are available for Oldham Company and Newton Company:

Oldham Company

Newton Company

Sales revenue

$385,000

$385,000

Variable costs

192,500

77,000

Contribution margin

192,500308,000Fixed costs

142,500

258,000Operating income

$50,000

$50,000

Calculate the break-even point in dollars and the margin of safety ratio for each company.(Round break-even point to the nearest whole dollar, e.g. 5,275 and margin of safety ratio to 2 decimal places, e.g. 15.25%.)

Oldham Company

Newton Company

Break-even point

$$Margin of safety ratio

%%

eTextbook and Media

Question Part Score

--/4

Calculate the degree of operating leverage for each company.(Round answers to 2 decimal places, e.g. 15.25.)

Oldham CompanyNewton Company

eTextbook and Media

Question Part Score

--/2

Assuming that sales revenue increases by20%, prepare a variable cost income statement for each company.

Oldham

Company

Newton

Company

Contribution margin

Operating income

Sales

Variable costs

Fixed costs

$$

Contribution margin

Sales

Variable costs

Operating income

Fixed costs

Variable costs

Sales

Operating income

Contribution margin

Fixed costs

Less

Add

:

Operating income

Fixed costs

Contribution margin

Variable costs

Sales

Operating income

Contribution margin

Sales

Variable costs

Fixed costs

$$

eTextbook and Media

Question Part Score

--/16

Assuming that sales revenue decreases by20%, prepare a variable cost income statement for each company.(Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Oldham

Company

Newton

Company

Sales

Variable costs

Operating income

Fixed costs

Contribution margin

$$

Fixed costs

Operating income

Sales

Contribution margin

Variable costs

Contribution margin

Operating income

Variable costs

Sales

Fixed costs

Add

Less

:

Variable costs

Operating income

Fixed costs

Contribution margin

Sales

Contribution margin

Sales

Variable costs

Fixed costs

Operating income

$$