Question
The sales and cost data for two companies in the transportation industry are as follows: Pacific Percent Atlantic Percent Sales $ 120,000 100 % $
The sales and cost data for two companies in the transportation industry are as follows:
Pacific Percent Atlantic Percent Sales $ 120,000 100 % $ 120,000 100 % Variable costs 72,000 60 36,000 30 Contribution margin 48,000 40 84,000 70 Fixed costs 36,000 72,000 Operating income (B) $ 12,000 $ 12,000
a. Calculate the degree of operating leverage (DOL) for both Pacific and Atlantic from the data above.
b. Based on your analysis, which company has more risk?
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Financial Accounting
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
4th Edition
0471072419, 978-0471072416
