Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Zero Company is planning the next year of operations and has just compiled the following Contribution Margin Income Statement: CM Income Statement Units Sold Per

Zero Company is planning the next year of operations and has just compiled the following Contribution Margin Income Statement:

CM Income Statement

Units Sold Per Unit Total

Sales 2,000.00 $600.00 $1,200,000.00

Variable Cost 2,000.00 $100.00 $200,000.00

Contribution Margin $1,000,000.00

Less Fixed Costs $900,000.00

Total Income Before Tax $100,000.00

1. Based on this information, Zero Company's leverage factor is __________

2. Based on the information in Question 1, if the company has a 9% increase in sales, its income before tax will 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

Step: 3

blur-text-image

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

Intermediate Accounting

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.

9th Canadian Edition, Volume 2

470964731, 978-0470964736, 978-0470161012

Students also viewed these Accounting questions