Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following sales and cost data (in thousands) are for two companies in the transportation industry: Sales Variable costs Contribution margin Fixed costs Operating profit
The following sales and cost data (in thousands) are for two companies in the transportation industry: Sales Variable costs Contribution margin Fixed costs Operating profit Required: Company A Company B Percent Percent of of Amount Sales Amount Sales $ 260,000 130,000 100% $ 260,000 100% 50 78,000 30 $ 130,000 27,300 50% $ 182,000 70% 72,300 $ 102,700 $ 109,700 1-a. Calculate the degree of operating leverage (DOL) for each company. 1-b. If sales increase from the present level, which company benefits more? 2. Assume that sales rise 20% in the next year but that everything else remains constant. Calculate the percentage increase in profit for each company. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Calculate the degree of operating leverage (DOL) for each company. (Round your ans Degree of operating leverage Company A Company B < Req 1A * Req 1B > Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 If sales increase from the present level, which company benefits more? OCompany A Company B < Req 1A Req 2 > Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Assume that sales rise 20% in the next year but that everything else remains const profit for each company. (Input your answers as percentages rounded to 2 decimal Company B Increase in profit Company A % < Req 1B % Req 2 >
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