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Information for two companies follows: Sales Contribution margin Fixed costs Skittles Company $ 4,718,050 3,278,050 2.659.550 Starburst Company $ 4,199,000 1,424,000 979.000

Information for two companies follows: Sales Contribution margin Fixed costs Skittles Company $ 4,718,050 3,278,050 2.659.550 Starburst Company $ 4,199,000 1,424,000 979.000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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S Information for two companies follows: Skittles Company $ 4,718,050 3,278,050 2,659,550 Sales Contribution margin Fixed costs (1) Compute the degree of operating leverage (DOL) for each company. (2) Which company is expected to produce a greater percent increase in income from a 30% increase in sales? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Starburst Company $ 4,199,000 1,424,000 979,000 Compute the degree of operating leverage (DOL) for each company. Skittles's DOL Starburst's DOL Numerator: Contribution margin Degree of Operating Leverage 1 1 3,278,050 / 1,424,000 / Denominator: Income = Ratio Degree of Operating Leverage ▬▬▬ O 0
Transcribed Image Text:S Information for two companies follows: Skittles Company $ 4,718,050 3,278,050 2,659,550 Sales Contribution margin Fixed costs (1) Compute the degree of operating leverage (DOL) for each company. (2) Which company is expected to produce a greater percent increase in income from a 30% increase in sales? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Starburst Company $ 4,199,000 1,424,000 979,000 Compute the degree of operating leverage (DOL) for each company. Skittles's DOL Starburst's DOL Numerator: Contribution margin Degree of Operating Leverage 1 1 3,278,050 / 1,424,000 / Denominator: Income = Ratio Degree of Operating Leverage ▬▬▬ O 0
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