Based on the income statements shown below, which division has the cost structure with the highest operating leverage? Soft Drinks Bottled Water Fruit Juices Revenue $50,000 $50,000 50,000 Variable costs (10,000) (5000) (30,000) Contribution margin 40,000 45,000 20,000 Fixed costs (30,000) (40,000) (10,000) Net income $10,000 $5000 10,000
Based on the income statements shown below, which division has the cost structure with the highest operating leverage? Soft Drinks Bottled Water Fruit Juices Revenue $50,000 $50,000 50,000 Variable costs (10,000) (5000) (30,000) Contribution margin 40,000 45,000 20,000 Fixed costs (30,000) (40,000) (10,000) Net income $10,000 $5000 10,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Based on the income statements shown below, which division has the cost structure with the highest operating leverage?
| Soft Drinks |
Bottled Water |
Fruit Juices |
||
| Revenue | $50,000 | $50,000 | 50,000 | |
| Variable costs | (10,000) | (5000) | (30,000) | |
| Contribution margin | 40,000 | 45,000 | 20,000 | |
| Fixed costs | (30,000) | (40,000) | (10,000) | |
| Net income | $10,000 | $5000 | 10,000 | |
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