General accounting A company has sales of $600,000, variable costs are 70%of sales, and operating income is $75,000. Calculate theoperating leverage.

Step 1: Definition of Operating LeverageThe Operating Leverage Factor measures how a company's…

Answered: A company has sales of $600,000,…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

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Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 23MC: If a firm has a contribution margin of $78M90 and a net income of $13,700 for the current month,...

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Company A has current sales of $4,000,000 and a 45% contribution margin. Its fixed costs are $600,000. Company B is a service firm with current service revenue of $2,800,000 and a 15% contributionmargin. Company B’s fixed costs are $375,000. Compute the degree of operating leverage for both companies.Which company will benefit most from a 15% increase in sales? Explain why.
2. A firm has the capacity to produce 924,230 units of a product each year. At present, it is operating at 83 percent of capacity. The firm's annual revenue is $1,114,913. Annual fixed costs are $521,290 and the variable costs are $.70 cents per unit. The following equations will be useful. Profit Revenue - Costs Revenue = Price each * quantity Costs = Fixed Cost + Variable Costs Variable Cost = Variable Cost per unit * number of units At the break even point, Profit = 0 What is the price for each unit? Your Answer:
Can you please answer this general accounting question?
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Kendall company has sales...I need answer
Company A is a manufacturer with sales of $6,000,000 and a 60% contribution margin. Its fixed costs equal $2,600,000. Company B is a consulting firm with service revenues of $4,500,000 and a 25% contribution margin. Its fixed costs equal $375,000. Compute the degree of operating leverage (DOL) for each company. Which company benefits more from a 20% increase in sales?

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A company has sales of $600,000, variable costs are 70% of sales, and operating income is $75,000. Calculate the operating leverage.