Question
The single-column CVP income statements shown below are available for Cullumber Company and Ivanhoe Company. Cullumber Co. Ivanhoe Co. Sales $510,000 $510,000 Variable costs 246,000
The single-column CVP income statements shown below are available for Cullumber Company and Ivanhoe Company.
Cullumber Co. | Ivanhoe Co. | |||
---|---|---|---|---|
Sales | $510,000 | $510,000 | ||
Variable costs | 246,000 | 55,000 | ||
Contribution margin | 264,000 | 455,000 | ||
Fixed costs | 164,000 | 355,000 | ||
Net income | $100,000 | $100,000 |
(a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e.g. 1.15.)
Degree of Operating Leverage | ||
---|---|---|
Cullumber | enter a value rounded to 2 decimal places | |
Ivanhoe | enter a value rounded to 2 decimal places |
(b) Assuming that sales revenue increases by 10% (due to a 10% increase in the number of units sold), prepare a single-column CVP income statement for each company.
Cullumber Company | Ivanhoe Company | |||
---|---|---|---|---|
select an income statement item Contribution MarginSales RevenueNet Income/(Loss)Administrative ExpensesTotal Fixed ExpensesCost of Goods SoldTotal Variable ExpensesGross ProfitVariable CostsSelling ExpensesFixed Costs | $enter a dollar amount | $enter a dollar amount | ||
select an income statement item Variable CostsContribution MarginTotal Fixed ExpensesTotal Variable ExpensesSales RevenueCost of Goods SoldSelling ExpensesFixed CostsAdministrative ExpensesGross ProfitNet Income/(Loss) | enter a dollar amount | enter a dollar amount | ||
select a summarizing line for the first part Total Variable ExpensesVariable CostsCost of Goods SoldGross ProfitTotal Fixed ExpensesNet Income/(Loss)Sales RevenueSelling ExpensesAdministrative ExpensesFixed CostsContribution Margin | enter a total amount for the first part | enter a total amount for the first part | ||
select an income statement item Contribution MarginFixed CostsVariable CostsAdministrative ExpensesGross ProfitSelling ExpensesCost of Goods SoldNet Income/(Loss)Sales RevenueTotal Variable ExpensesTotal Fixed Expenses | enter a dollar amount | enter a dollar amount | ||
select a closing name for this statement Total Variable ExpensesGross ProfitCost of Goods SoldFixed CostsTotal Fixed ExpensesSales RevenueAdministrative ExpensesNet Income/(Loss)Selling ExpensesContribution MarginVariable Costs | $enter a total net income or loss amount | $enter a total net income or loss amount |
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