1. The following CVP income statements are available for ABC Company and XYZ Company. Sales Variable costs Contribution margin Fixed costs Operating income ABC Company CVP I/S for 2020 $500,000 300,000 200,000 180,000 $ 20,000 XYZ Company CVP I/S for 2020 $500,000 180,000 320,000 300,000 $ 20,000 a) Compute the break-even point in dollars and the margin of safety ratio for each company. b) Compute the degree of operating leverage for each company. c) Assuming that sales revenue decreases by 20%, prepare a CVP income statement for each comnany

1. The following CVP income statements are available for ABC Company and XYZ Company. Sales Variable costs Contribution margin Fixed costs Operating income ABC Company CVP I/S for 2020 $500,000 300,000 200,000 180,000 $ 20,000 XYZ Company CVP I/S for 2020 $500,000 180,000 320,000 300,000 $ 20,000 a) Compute the break-even point in dollars and the margin of safety ratio for each company. b) Compute the degree of operating leverage for each company. c) Assuming that sales revenue decreases by 20%, prepare a CVP income statement for each comnany

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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