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

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Chapter3: Cost-volume-profit Analysis

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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.
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.
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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.
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Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $295,300 $834,000 Variable costs 118,500 500,400 Contribution margin $176,800 $333,600 Fixed costs 124,800 194,600 Income from operations $52,000 $139,000 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 income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. $ % Bryant Inc. $ % c. The difference in the of income from operations 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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