Operating LeverageBeck Inc. and Bryant Inc. have the following operating data:Beck Inc. Bryant Inc.Sales$315,600$840,000Variable costs(126,600)(504,000)Contribution margin$189,000$336,000Fixed costs(126,000)(168,000)Operating income$63,000$168,000a. 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 nearestwhole number.PercentageDollars3063,000 XBeck Inc.20 X %Bryant Inc.of operating Income is due to the difference in the operating leverages. Beck Inc.'s higherC. The difference in the increasesV percentage of contribution margin than are Bryant Inc. s.operating leverage means that its fixed costs are a larger

Formula: Percentage of change in profit = Degree of operating leverage x Increase in sales %

Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $315,600 $840,000 Variable costs (126,600) (504,000) Contribution margin $189,000 $336,000 Fixed costs (126,000) (168,000) Operating income $63,000 $168,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.

Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $315,600 $840,000 Variable costs (126,600) (504,000) Contribution margin $189,000 $336,000 Fixed costs (126,000) (168,000) Operating income $63,000 $168,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 16E

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