Homework Help is Here – Start Your Trial Now!
Business
Accounting
Based on the income statements of the three following retail businesses, which company has the highest operating leverage?    Alpha Company   Beta Company   Gamma Company Revenue $ 200,000     $ 200,000     $ 200,000   Variable costs   (95,000 )     (155,000 )     (125,000 ) Contribution margin $ 105,000     $ 45,000     $ 75,000   Fixed costs   (80,000 )     (20,000 )     (50,000 ) Net income $ 25,000     $ 25,000     $ 25,000         Beta Company     Gamma Company     Alpha Company     They all have same operating leverage

Based on the income statements of the three following retail businesses, which company has the highest operating leverage?    Alpha Company   Beta Company   Gamma Company Revenue $ 200,000     $ 200,000     $ 200,000   Variable costs   (95,000 )     (155,000 )     (125,000 ) Contribution margin $ 105,000     $ 45,000     $ 75,000   Fixed costs   (80,000 )     (20,000 )     (50,000 ) Net income $ 25,000     $ 25,000     $ 25,000         Beta Company     Gamma Company     Alpha Company     They all have same operating leverage

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

QUESTION 4

  1. Based on the income statements of the three following retail businesses, which company has the highest operating leverage? 

      Alpha Company   Beta Company   Gamma Company
    Revenue $ 200,000     $ 200,000     $ 200,000  
    Variable costs   (95,000 )     (155,000 )     (125,000 )
    Contribution margin $ 105,000     $ 45,000     $ 75,000  
    Fixed costs   (80,000 )     (20,000 )     (50,000 )
    Net income $ 25,000     $ 25,000     $ 25,000  
     
       
    Beta Company
       
    Gamma Company
       
    Alpha Company
       
    They all have same operating leverage
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Trading
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS