Couzen's Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.29 and fixed costs of $468,000. Every dollar of sales contributes 29 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 0.79 and fixed costs of $2,418,000. Every dollar of sales contributes 79 cents toward fixed costs and profit. Both companies have sales of $3,900,000 annually. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 12 percent decrease in sales volume. By how much would each company's profits decrease? Complete this question by entering your answers in the tabs below. Required A Required B Compare the two companies' cost structures. Couzen's Company Sales Variable cost Contribution margin Fixed costs Operating profit Amount Percentage % % % % % < Required A Jones & Family Amount Percentage Required B % % % % %

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Couzen's Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.29 and fixed costs of
$468,000. Every dollar of sales contributes 29 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 0.79 and fixed costs of $2,418,000. Every dollar of
sales contributes 79 cents toward fixed costs and profit. Both companies have sales of $3,900,000 annually.
Required:
a. Compare the two companies' cost structures.
b. Suppose that both companies experience a 12 percent decrease in sales volume. By how much would each company's profits
decrease?
Complete this question by entering your answers in the tabs below.
Required A Required B
Compare the two companies' cost structures.
Couzen's Company
Sales
Variable cost
Contribution margin
Fixed costs
Operating profit
Amount
Percentage
%
%
%
%
%
< Required A
Jones & Family
Amount
Percentage
Required B
>
%
%
%
%
%
Transcribed Image Text:Couzen's Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.29 and fixed costs of $468,000. Every dollar of sales contributes 29 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 0.79 and fixed costs of $2,418,000. Every dollar of sales contributes 79 cents toward fixed costs and profit. Both companies have sales of $3,900,000 annually. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 12 percent decrease in sales volume. By how much would each company's profits decrease? Complete this question by entering your answers in the tabs below. Required A Required B Compare the two companies' cost structures. Couzen's Company Sales Variable cost Contribution margin Fixed costs Operating profit Amount Percentage % % % % % < Required A Jones & Family Amount Percentage Required B > % % % % %
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