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The following sales and cost data (in thousands) are for two companies in the transportation industry: Company A Company B Amount Percent of Sales Amount

The following sales and cost data (in thousands) are for two companies in the transportation industry:

Company A Company B
Amount Percent of Sales Amount Percent of Sales
Sales $ 240,000 100% $ 240,000 100%
Variable costs 120,000 50 72,000 30
Contribution margin $ 120,000 50% $ 168,000 70%
Fixed costs 21,600 62,600
Operating profit $ 98,400 $ 105,400

Required:

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 10% in the next year but that everything else remains constant. Calculate the percentage increase in profit for each company.

Lawn Master Company, a manufacturer of riding lawn mowers, has a projected income for the coming year as follows:

Sales $ 33,000,000
Operating expenses:
Variable expenses $ 26,400,000
Fixed expenses 3,300,000
Total expenses 29,700,000
Operating profit $ 3,300,000

Required:

1. Determine the breakeven point in sales dollars.

2. Determine the required sales in dollars to earn a before-tax profit of $3,900,000. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

3. What is the breakeven point in sales dollars if the variable expenses increases by 12%? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)

I have been stuck on this for the past 3.5 hours, at this point the frustration is giving my a complete mental block. Please help me. Thank you in advance it is appreciated greatly.

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