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.

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Chapter1: Financial Statements And Business Decisions
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Operating Leverage
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.
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.
Percentage
Dollars
30
63,000 X
Beck Inc.
20 X %
Bryant Inc.
of operating Income is due to the difference in the operating leverages. Beck Inc.'s higher
C. The difference in the increases
V percentage of contribution margin than are Bryant Inc. s.
operating leverage means that its fixed costs are a larger
Transcribed Image Text:Operating Leverage 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. 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. Percentage Dollars 30 63,000 X Beck Inc. 20 X % Bryant Inc. of operating Income is due to the difference in the operating leverages. Beck Inc.'s higher C. The difference in the increases V percentage of contribution margin than are Bryant Inc. s. operating leverage means that its fixed costs are a larger
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