Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $275,600 $882,000 Variable costs 110,600 529,200 Contribution margin $165,000 $352,800 Fixed costs 110,000 205,800 Income from operations $55,000 $147,000 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 income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. %

Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $275,600 $882,000 Variable costs 110,600 529,200 Contribution margin $165,000 $352,800 Fixed costs 110,000 205,800 Income from operations $55,000 $147,000 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 income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $1,250,000 $2,000,000 Variable Cost 750,000 1,250,000 Contribution Margin 500,000 750,000 Fixed Cost 400,000 450,000 Income from Operation $100,000 $300,000 Compute the operating leverage for Beck Inc. and Bryant Inc. How much would income from operations increase for each company if the sales of each increased by 20%? Why is there a difference in the increase in income from operations for the two companies? Explain.
Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $275,600 $882,000 Variable costs 110,600 529,200 Contribution margin $165,000 $352,800 Fixed costs 110,000 205,800 Income from operations $55,000 $147,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Вeck Inc. Bryant Inc. 2.4 b. How much would income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Вeck Inc. $ 33,000 60 V % Bryant Inc. 70,560 57 X % c. The difference in the increases of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher v operating leverage means that its fixed costs are a larger percentage of contribution margin than are Bryant Inc.'s.
Sagar
Peterson Manufacturing is evaluating two different operating structures which are described below. The firm has annual interest expense of $250, common shares outstanding of 1,000, and a tax rate of 40 percent. Fixed Cost Price per unit Variable cost per unit Operating Structure 1 $500 $1 $0.75 Operating Structure 2 $1200 $1 $0.70 1. For each operating structure, calculate x. EBIT and EPS at 10,000, 20,000, and 30,000 units. y. the degree of operating leverage (DOL) and degree of total leverage (DTL) using 20,000 units as a base sales level. z. the operating breakeven point in units. 2. Which operating structure has greater operating leverage and business risk? 3. If Peterson projects sales of 20,000 units, which operating structure is recommended?
GenoPearls Company, a division of PUSHING THE LIMITS Corporation, has sales of P12,000,000 and variable costs and expenses amounting to P8,000,000. The average assets utilized in the operations also amount to P8,000,000 with a 12% cost of capital. Direct fixed costs and expenses amounts to P1,000,000. In measuring the performance of GenoPearls Company, return on investment and residual income are then by what amounts? (Sample format of the answer: 12.34%; P1,234,567)
Operating Leverage
Operating Leverage Felipe Enterprises reports the following data: Sales $330,000 Variable costs 140,000 Contribution margin $190,000 Fixed costs 95,000 Income from operations $95,000 Determine Felipe Enterprises’s operating leverage.
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.
Consider the following summary modified income statement for Tech Inc.: Sales $593,000 Variable Operating Costs 252,000 Contribution Margin $341,000 Fixed Operating Costs 121,000 Operating Income $220,000 Interest Expense 26,000 Net Income $194,000 Calculate Tech's degree of operating leverage. A В C E 1 2 Degree of Operating Leverage = 4 5 7 8 9 10 3. 6.
Vikram Bhai
Ram Company has three geographic segments: New York, New Jersey, and Connecticut. Its segmented income statement for last year is shown below: Company New York New Jersey Connecticut Sales 800,000 350,000 250,000 200,000 Variable costs 440,000 140,000 120,000 CM Traceable Fixed Costs 90,000 65,000 50,000 Segment margin Common Fixed Costs Net operating income 1. What was the amount of segment margin for New York? a)$60,000 b)$70,000 c)$80,000 d)$50,000 2. If Ram Company’s total fixed costs were $305,000, how much were the company’s common fixed costs? a)$110,000 b)$80,000 c)$100,000 d)$90,000
Guava Corporation has two divisions, Beverages and Snacks. Here are data for the most recent year: Total company Sales Variable costs Contribution margin Traceable fixed costs Segment margin O $720,000 O $750,000 O $760,000 O $780.000 ? O None of the above $390,000 ? ? ? Beverages ? $180,000 ? $150,000 $(30,000) Guava's total company operating income is $45,000 and its common fixed costs are $75,000. What are Guava's total company sales? ? Snacks $300,000 $210,000 ? ?