Homework Help is Here – Start Your Trial Now!
Business
Accounting
Compare the two companies' cost structures. Couzen's Company Sales Variable cost Contribution margin Fixed costs Operating profit Amount $ $ 3,975,000 Jones & Family Percentage Amount % $ 3,975,000 % % % % Percentage % % % % %

Compare the two companies' cost structures. Couzen's Company Sales Variable cost Contribution margin Fixed costs Operating profit Amount $ $ 3,975,000 Jones & Family Percentage Amount % $ 3,975,000 % % % % Percentage % % % % %

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Couzen's Company’s cost structure is dominated by variable costs with a contribution margin ratio of 0.25 and fixed costs of $477,000. Every dollar of sales contributes 25 cents toward fixed costs and profit. The cost structure of a competitor, Jones & Family, is dominated by fixed costs with a higher contribution margin ratio of 0.75 and fixed costs of $2,464,500. Every dollar of sales contributes 75 cents toward fixed costs and profit. Both companies have sales of $3,975,000 annually.

Required:

  1. Compare the two companies’ cost structures.
  2. Suppose that both companies experience a 12 percent decrease in sales volume. By how much would each company’s profits decrease?
  3. (PLEASE FILL OUT CHART IN ATTACHED PIC)

Suppose that both companies experience a 12 percent decrease in sales volume. By how much would each company’s profits decrease?

Couzen’s Company’s profits decrease by?
Jones & Family’s profits decrease by?

Compare the two companies' cost structures. Couzen's Company Sales Variable cost Contribution margin Fixed costs Operating profit Amount $ $ 3,975,000 Jones & Family Percentage Amount % $ 3,975,000 % % % % Percentage % % % % %
Transcribed Image Text:Compare the two companies' cost structures. Couzen's Company Sales Variable cost Contribution margin Fixed costs Operating profit Amount $ $ 3,975,000 Jones & Family Percentage Amount % $ 3,975,000 % % % % Percentage % % % % %
Expert Solution
steps

Step by step

Solved in 2 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS