Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $199,700 $615,000 Variable costs 80,100 369,000 Contribution margin $119,600 $246,000 Fixed costs Income from operations 73,600 $46,000 123,000 $123,000 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 its fixed costs are a larger ✓ of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher percentage of contribution margin than are Bryant Inc.'s. operating leverage means that Feedback
Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $199,700 $615,000 Variable costs 80,100 369,000 Contribution margin $119,600 $246,000 Fixed costs Income from operations 73,600 $46,000 123,000 $123,000 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 its fixed costs are a larger ✓ of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher percentage of contribution margin than are Bryant Inc.'s. operating leverage means that Feedback
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Operating Leverage
Beck Inc. and Bryant Inc. have the following operating data:
Beck Inc.
Bryant Inc.
Sales
$199,700
$615,000
Variable costs
80,100
369,000
Contribution margin
$119,600
$246,000
Fixed costs
Income from operations
73,600
$46,000
123,000
$123,000
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
its fixed costs are a larger
✓ of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher
percentage of contribution margin than are Bryant Inc.'s.
operating leverage means that
Feedback
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