Hello tutor solution this accounting questions 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:Formula of degree of operating leverage = Contribution margin/ net income before tax Step…

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...

See similar textbooks

Similar questions

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.
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 $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.
What is operating leverage for the info attached? 1.3, 2.7 or 6.7
The cost equation of YTS Inc. is y = 35x + 400,000. y is the profit, 35 is the contribution margin per unit, x is the number of units sold, and 400,000 is the total fixed cost. What is the total units to be sold to arrive a profit of 146,000?
Celine Co. generates sales of P 500,000. Variable cost is 25% and fixed cost isP 75,000. Compute: Degree of operating leverage.
O Fulham Machinery has a variable cost per unit of $450, a sales price of $850, fixed operating costs of $1,200,000 and fixed financing expenses of $500,000. At the output level of 20,000 units, what would be the degree of operating leverage (DOL) for Fulman? How would you interpret it?

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

SEE MORE TEXTBOOKS