Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $290,900 $805,500 Variable costs (116,700) (483,300) Contribution margin $174,200 $322,200 Fixed costs (107,200) (143,200) Operating income $67,000 $179,000 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 10%? 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.
Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $290,900 $805,500 Variable costs (116,700) (483,300) Contribution margin $174,200 $322,200 Fixed costs (107,200) (143,200) Operating income $67,000 $179,000 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 10%? 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Beck Inc. and Bryant Inc. have the following operating data:
| Beck Inc. | Bryant Inc. | |||
| Sales | $290,900 | $805,500 | ||
| Variable costs | (116,700) | (483,300) | ||
| Contribution margin | $174,200 | $322,200 | ||
| Fixed costs | (107,200) | (143,200) | ||
| Operating income | $67,000 | $179,000 |
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 10%? 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.
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