Asha Inc. and Samir Inc. have the following operating data: Line Item Description Asha Inc. Samir Inc. Sales $216,800 $632,000 Variable costs (87,000) (379,200) Contribution margin $129,800 $252,800 Fixed costs (70,800) (94,800) Operating income $59,000 $158,000 a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. fill in the blank 1 of 2 Samir Inc. fill in the blank 2 of 2 b. How much would operating income increase for each company if the sales of each increased by 15%? If required, round answers to nearest whole number. Company Dollars Percentage Asha Inc. $fill in the blank 3 fill in the blank 4% Samir Inc. $fill in the blank 5 fill in the blank 6% c. The difference in the fill in the blank 1 of 3 of operating income is due to the difference in the operating leverages. Asha Inc.'s fill in the blank 2 of 3 operating leverage means that its fixed costs are a fill in the blank 3 of 3 percentage of contribution margin than are Samir Inc.'s.
Asha Inc. and Samir Inc. have the following operating data:
Line Item Description | Asha Inc. | Samir Inc. |
---|---|---|
Sales | $216,800 | $632,000 |
Variable costs | (87,000) | (379,200) |
Contribution margin | $129,800 | $252,800 |
Fixed costs | (70,800) | (94,800) |
Operating income | $59,000 | $158,000 |
a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place.
Asha Inc. fill in the blank 1 of 2
Samir Inc. fill in the blank 2 of 2
b. How much would operating income increase for each company if the sales of each increased by 15%? If required, round answers to nearest whole number.
Company | Dollars | Percentage |
---|---|---|
Asha Inc. | $fill in the blank 3 | fill in the blank 4% |
Samir Inc. | $fill in the blank 5 | fill in the blank 6% |
c. The difference in the fill in the blank 1 of 3
of operating income is due to the difference in the operating leverages. Asha Inc.'s fill in the blank 2 of 3
operating leverage means that its fixed costs are a fill in the blank 3 of 3
percentage of contribution margin than are Samir Inc.'s.
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 5 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![Essentials Of Investments](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
![FUNDAMENTALS OF CORPORATE FINANCE](https://www.bartleby.com/isbn_cover_images/9781260013962/9781260013962_smallCoverImage.gif)
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Essentials Of Investments](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
![FUNDAMENTALS OF CORPORATE FINANCE](https://www.bartleby.com/isbn_cover_images/9781260013962/9781260013962_smallCoverImage.gif)
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Foundations Of Finance](https://www.bartleby.com/isbn_cover_images/9780134897264/9780134897264_smallCoverImage.gif)
![Fundamentals of Financial Management (MindTap Cou…](https://www.bartleby.com/isbn_cover_images/9781337395250/9781337395250_smallCoverImage.gif)
![Corporate Finance (The Mcgraw-hill/Irwin Series i…](https://www.bartleby.com/isbn_cover_images/9780077861759/9780077861759_smallCoverImage.gif)