Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.45 and fixed costs of $113,400. Every dollar of

image text in transcribed

The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.45 and fixed costs of $113,400. Every dollar of sales contributes 45 cents toward fixed costs and profit. The cost structure of a competitor, One-Mart, is dominated by fixed costs with a higher contribution margin ratio of 0.70 and fixed costs of $270,900. Every dollar of sales contributes 70 cents toward fixed costs and profit. Both companies have sales of $630,000 for the month Required a. Compare the two companies' cost structures GREENBACK STORE ONE-MART Amount PercentageAmo unt Percentage Sales Variable cost Contribution margin Fixed costs Operating profit 630,000 100196 $ 630,000 1001% 346,500 283,500|| 45%) $ 441,000 113,400 189,000 30 701 % 43 18 270,900 b. Suppose that both companies experience a 15 percent increase in sales volume. By how much would each company's profits increase? Greenback Store's profits increase by One-Mart's profits increase by

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Auditing Real Issues And Cases

Authors: Michael Chris Knapp

9th International Edition

1133187900, 978-1133187905

More Books

Students also viewed these Accounting questions

Question

How would you establish the value of learning this material?

Answered: 1 week ago

Question

4. How has e-commerce affected business-to-business transactions?

Answered: 1 week ago