Provide this question solution general accounting Company A is a manufacturer with current sales of$3,300,000 and a 60% contribution margin. Its fixed costsequal $1,450,000. Company B is a consulting firm withcurrent service revenues of $3,200,000 and a 30%contribution margin. Its fixed costs equal $460,000.Compute the degree of operating leverage (DOL) for eachcompany.

Step 1: Define Degree of Operating LeverageDegree of operating leverage is a financial multiple that…

Answered: Company A is a manufacturer with…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 14EB: Company A has current sales of $4,000,000 and a 45% contribution margin. Its fixed costs are...

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Company A has current sales of $4,000,000 and a 45% contribution margin. Its fixed costs are $600,000. Company B is a service firm with current service revenue of $2,800,000 and a 15% contribution margin. Company Bs fixed costs are $375,000. Compute the degree of operating leverage for both companies. Which company will benefit most from a 15% increase in sales? Explain why.
Porter Corporation has fixed costs of $500,000, variable costs of $32 per unit and a contribution margin ratio of 20% a. Compute the unit sales price and unit contribution margin. b. Compute the sales volume in units required for Porter Corp to earn and operating income of $900,000 c. Compute the dollar sales volume required for Porter Corp to earn an operating income of $900,000.
What is operating leverage for the info attached? 1.3, 2.7 or 6.7
D&R Corp. has annual revenues of $262,000, an average contribution margin ratio of 33%, and fixed expenses of $101,800. Required: a. Management is considering adding a new product to the company's product line. The new item will have $8.7 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio. b. If the new product adds an additional $29,100 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in part a to break even on the new product? c. If 20,900 units of the new product could be sold at a price of $14.2 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Required C If 20,900 units of the new product could be sold at a price of…
6. Compare the following two companies: Company A is a retail merchandise firm with current sales of $4,000,000 and a 45% contribution margin. Company A's fixed costs are $600,000. Company B is a service firm with current service revenue of $2,800,000 and a 15% contribution margin. Company B’s fixed costs are $375,000. The following names are to be considered when completing this problem: Operating Income Variable Costs Sales Fixed Costs per Unit Selling Price per Unit Variable Cost per Unit Contribution Margin Fixed Costs Operating Loss to help complete this problem. All amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Based on the information given, prepare a complete contribution margin income statement for Company A: Company A Contribution Margin Income Statement Projected Based on the information given, prepare a complete contribution margin income statement for Company B: Compute…
Porter Corporation has fixed costs of $500,000, variable costs of $32 per unit, and a contribution margin ratio of 20 percent. Compute the following. Unit sales price and unit contribution margin for the given product. The sales volume in units required for Porter Corporation to earn an operating income of $900,000. The dollar sales volume required for Porter Corporation to earn an operating income of $900,000.
B. C. D&R Corporation has annual revenues of $375,000, an average contribution margin ratio of 32%, and fixed expenses of $150,000. Required: a. Management is considering adding a new product to the company's product line. The new item will have $9.52 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio. b. If the new product adds an additional $26,880 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in part a to break even on the new product? c. If 16,000 units of the new product could be sold at a price of $15.50 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. Complete this question by entering your answers in the tabs below. Required A Required B Management is considering adding a new product to the company's product line. The new item will have $9.52 of…
Glover Inc. manufactures Product B, incurring variable costs of $15.00 per unit and fixed costs of $70,000. Glover desires a profit equal to a 12% rate of return on assets. Assets of $785,000 are devoted to producing Product B, and 100,000 units are expected to be produced and sold. a. Compute the markup percentage using the total cost concept.fill in the blank 1 % b. Compute the selling price of Product B. Round your answer to two decimal places.$fill in the blank 2
3. income statement for the diff. companies in the same industry are as follows: trimax, inc. quintex, inc. sales p 500,000 p 500,000 less: variable costs 250,000 100,000 contribution margin p 250,000 p 400,000 less: fixed costs 200,000 350,000 operating income p 50,000 p 50,000 required: 1. compute the degree of operating leverage for each company. 2. compute the break-even point for each company. explain why the break-even point for quintex, inc. is higher. 3. suppose that both companies experience a 50 percent increase in revenues. compute the percentage change in profits for each company.
both answer please provide.
Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Loss) 0 500 1,000 1,500 2,000 2,500 3,000 Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output. PQB = FC + VQB PQB - VQB = FC QB (P-V) = FC QB = FC P-V What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would…
Li Company has a unit selling price of $150, unit variable costs of $45, and total fixed costs of $47,200. How much sales revenue must Li Company generate to achieve net income of $27,700. Sales revenue needed to achieve target net income $

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