Company A is a manufacturer with current sales of $3,300,000 and a 60% contribution margin. Its fixed costs equal $1,450,000. Company B is a consulting firm with current 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 each company.
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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.Company A has current sales of $4.000.000 and a 45% contribution margin. Its fixed costs are S600.000. 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. Compute the degree of operating leverage for both companies.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% contributionmargin. Company B’s 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.
- Company A has current sales of $11,797,718 and a 36% contribution margin. Its fixed costs are $2,911,015. Company B is a service firm with current service revenue of $6,207,099 and a 15% contribution margin. Company B’s fixed costs are $604,274. Compute the degree of operating leverage for Company B. Round to the hundredth, two decimals.A company has total sales of $1,000,000, variable costs of $500,000, and fixed costs of $200,000. What is the contribution margin ratio?Company A has current sales of $11,132,680 and a 32% contribution margin. Its fixed costs are $2,280,726. Company B is a service firm with current service revenue of $6,286,402 and a 24% contribution margin. Company B’s fixed costs are $686,218. Compute the degree of operating leverage for Company A. Round to the hundredth, two decimals.
- Company A has current sales of $10, 337, 376 and a 48% contribution margin. Its fixed costs are $2,242,728. Company B is a service firm with a current service revenue of $6,907, 643 and a 18% contribution margin. Company B's fixed costs are $620, 046. Using the degree of operating leverage for Company A, what will be the increase to net income if there was a 21% increase in sales? Round to the hundredth, two decimals.Company A is a manufacturer with sales of $6,000,000 and a 60% contribution margin. Its fixed costs equal $2,600,000. Company B is a consulting firm with service revenues of $4,500,000 and a 25% contribution margin. Its fixed costs equal $375,000. Compute the degree of operating leverage (DOL) for each company. Which company benefits more from a 20% increase in sales?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 1. Based on the information given, prepare a complete contribution margin income statement for Company A: Company AContribution Margin Income StatementProjected 2. Based on the information given, prepare a complete contribution margin income statement for Company B: Company BContribution Margin Income StatementProjected 3.Compute the degree of operating leverage for…
- 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.Asha Inc. and Samir Inc. have the following operating data: Sales Variable costs Contribution margin Fixed costs Asha Inc. $2,500,000 (1,500,000) $1,000,000 (800,000) $200,000 Asha Inc. Samir Inc. Samir Inc. $4,000,000 (2,500,000) $1,500,000 (900,000) $600,000 Operating income a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. 150 75 Samir Inc. b. How much would operating income increase for each company if the sales of each increased by 30%? Dollars Percentage 30 % 30 % c. The difference in the increases of operating income is due to the difference in the operating leverages. Asha Inc.'s higher operating leverage means that its fixed costs are a smaller Inc.'s. percentage of contribution margin than are SamirA company has sales of $1,000,000, variable costs of $250,000, and fixed costs of $600,000. Compute the following: 1. Contribution margin ratio. 2. Break-even sales volume. 3. Margin of safety ratio. 4. Net operating income percentage.