Answered step by step
Verified Expert Solution
Question
1 Approved Answer
work (Chapter 3) The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $57,200.
work (Chapter 3) The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $57,200. Every dollar of sales contributes 30 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 $233,200. Every dollar of sales contribut 70 cents toward fixed costs and profit. Both companies have sales of $440,000 for the month. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 20 percent increase in sales volume. By how much would each company's profits increase? Complete this question by entering your answ tabs below. Required A Required B Compare the two companies' cost structures. GREENBACK STORE Amount Percentage $ 440,000 100% ONE-MART Amount Percentage $ 440,000 100% Sales Variable cost Contribution margin Fixed costs Operating profit Required B >
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