Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $341,300 $1,072,500 Variable costs 136,900 643,500 Contribution margin $204,400 $429,000 Fixed costs 131,400 234,000 Income from operations $73,000 $195,000
Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $341,300 $1,072,500 Variable costs 136,900 643,500 Contribution margin $204,400 $429,000 Fixed costs 131,400 234,000 Income from operations $73,000 $195,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Operating Leverage
Beck Inc. and Bryant Inc. have the following operating data:
| Beck Inc. | Bryant Inc. | |||
| Sales | $341,300 | $1,072,500 | ||
| Variable costs | 136,900 | 643,500 | ||
| Contribution margin | $204,400 | $429,000 | ||
| Fixed costs | 131,400 | 234,000 | ||
| Income from operations | $73,000 | $195,000 |
a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.
| Beck Inc. | fill in the blank 1 |
| Bryant Inc. | fill in the blank 2 |
b. How much would income from operations increase for each company if the sales of each increased by 15%? If required, round answers to nearest whole number.
| Dollars | Percentage | ||
| Beck Inc. | $fill in the blank | fill in the blank | % |
| Bryant Inc. | $fill in the blank | fill in the blank | % |
c. The difference in the fill in the blank of income from operations is due to the difference in the operating leverages. Beck Inc.'s fill in the blank operating leverage means that its fixed costs are a fill in the blank percentage of contribution margin than are Bryant Inc.'s.
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