Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $304,600 $912,000 Variable costs 122,200 547,200 Contribution margin $182,400 $364,800 Fixed costs 125,400 212,800 Income from operations $57,000 $152,000 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 15%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. Bryant Inc. c. The difference in the increases of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher operating leverage means that its fixed costs are i larger percentage of contribution margin than are Bryant Inc.'s.
Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $304,600 $912,000 Variable costs 122,200 547,200 Contribution margin $182,400 $364,800 Fixed costs 125,400 212,800 Income from operations $57,000 $152,000 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 15%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. Bryant Inc. c. The difference in the increases of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher operating leverage means that its fixed costs are i larger percentage of contribution margin than are Bryant Inc.'s.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Operating Leverage
Transcribed Image Text:Operating Leverage
Beck Inc. and Bryant Inc. have the following operating data:
Beck Inc.
Bryant Inc.
Sales
$304,600
$912,000
Variable costs
122,200
547,200
Contribution margin
$182,400
$364,800
Fixed costs
125,400
212,800
Income from operations
$57,000
$152,000
a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.
Beck Inc.
Bryant Inc.
b. How much would income from operations increase for each company if the sales of each increased by 15%? If required, round answers to nearest whole number.
Dollars
Percentage
Beck Inc.
2$
%
Bryant Inc.
%
c. The difference in the increases
of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher
operating leverage means that its fixed costs are a larger
percentage of
contribution margin than are Bryant Inc.'s.
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