Operating leverageAsha Inc. and Samir Inc. have the following operating data:Asha Inc.SalesVariable costsContribution margin$220,400(88,400)$132,000(72,000)$60,000Samir Inc.Asha Inc.Samir Inc.$640,000(384,000)$256,000(95,000)$160,000Fixed costsOperating incomea. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place.Asha Inc.Samir Inc.b. How much would operating income increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number.DollarsPercentage%9c. The difference in the increases ✔ of operating income is due to the difference in the operating leverages. Asha Inc.'s higherpercentage of contribution margin than are Samir Inc.'s.operating leverage means that its fixed costs are a larger

Operating leverage means the degree to which companies operating cost are fixed rather than…

Asha Inc. and Samir Inc. have the following operating data: Asha Inc. Sales $220,400 (88,400) $132,000 Asha Inc. Samir Inc. Samir Inc. Contribution margin Fixed costs Operating income a. Compute the operating leverage for Ashe Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. Samir Inc. (72,000) $60,000 $640,000 (384,000) $256,000 (96,000) $160,000 b. How much would operating income increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage c. The difference in the increases of operating income is due to the difference in the operating leverages. Asha Inc.'s higher percentage of contribution margin than are Samir Inc.'s. ✓operating leverage means that its fixed costs are a larger

Asha Inc. and Samir Inc. have the following operating data: Asha Inc. Sales $220,400 (88,400) $132,000 Asha Inc. Samir Inc. Samir Inc. Contribution margin Fixed costs Operating income a. Compute the operating leverage for Ashe Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. Samir Inc. (72,000) $60,000 $640,000 (384,000) $256,000 (96,000) $160,000 b. How much would operating income increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage c. The difference in the increases of operating income is due to the difference in the operating leverages. Asha Inc.'s higher percentage of contribution margin than are Samir Inc.'s. ✓operating leverage means that its fixed costs are a larger

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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Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. BUCKLEY COMPANY Income Statements for Year 2 Segment A B C Sales $ 330,000 $ 480,000 $ 500,000 Cost of goods sold (242,000 ) (184,000 ) (190,000 ) Sales commissions (30,000 ) (44,000 ) (44,000 ) Contribution margin 58,000 252,000 266,000 General fixed operating expenses (allocation of president’s salary) (92,000 ) (92,000 ) (92,000 ) Advertising expense (specific to individual divisions) (6,000 ) (20,000 ) 0 Net income (loss) $ (40,000 ) $ 140,000 $ 174,000 Required Prepare a schedule of relevant sales and costs for Segment A. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Options for required A table are: Advertising…
genow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSession Lo... r Operating Leverage Teague Co. reports the following data: Sales Variable costs Contribution margin Fixed costs $480,000 264,000 $216,000 175,200 $40,800 Income from operations Determine Teague Co.'s operating leverage. Round your answer to one decimal place.
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Shirley Incorporated has three divisions, King, West and Gold. All common fixed costs are unavoidable. Following is the segmented income statement for the previous year: Sales revenue Variable costs Contribution margin Direct fixed costs Segment margin Common fixed costs (allocated) Net operating income (loss) King $ 1,040,000 312,000 $ 728,000 104,000 $ 624,000 391,000 $ 233,000 Required: a. What would Shirley's net income (loss) be if the West Division were dropped? b. What would Shirley's net income (loss) be if the Gold Division were dropped? Complete this question by entering your answers in the tabs below. Required A Required B What would Shirley's net income (loss) be if the West Division were dropped? Gold $426,000 251,340 $ 174,660 48.000 $ 126,660 159,375 $ (32,715) Total $ 2,048,000 889,260 $ 1,158,740 192,000 $ 966,740 763,000 $ 203,740
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Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $267,200 $871,000 Variable costs (107,200) (522,600) Contribution margin $160,000 $348,400 Fixed costs (110,000) (214,400) Operating income $50,000 $134,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Beck Inc. Bryant Inc. b. How much would operating income increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. $ % Bryant Inc. $ % c. The difference in the of operating income is due to the difference in the operating leverages. Beck Inc.'s operating leverage means that its fixed costs are a percentage of contribution margin than are Bryant Inc.'s.
Vikram Bhai
Bryce Co. sales are $897,000, variable costs are $468,500, and operating income is $276,000. The contribution margin ratio is Oa. $2.2% Ob. 57.4% Oc. 47.8% Od. 43.5%
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