Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $325,700 $1,000,000 Variable costs 130,700 600,000 Contribution margin $195,000 $400,000 Fixed costs 120,000 200,000 Income from operations $75,000 $200,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Beck Inc. fill in the blank 1 Bryant Inc. fill in the blank 2 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. $fill in the blank 3 fill in the blank 4 % Bryant Inc. $fill in the blank 5 fill in the blank 6 % c. The difference in the of income from operations is due to the difference in the operating leverages. Beck Inc.'s operating leverage means that its fixed costs are a 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 $325,700 $1,000,000 Variable costs 130,700 600,000 Contribution margin $195,000 $400,000 Fixed costs 120,000 200,000 Income from operations $75,000 $200,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Beck Inc. fill in the blank 1 Bryant Inc. fill in the blank 2 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. $fill in the blank 3 fill in the blank 4 % Bryant Inc. $fill in the blank 5 fill in the blank 6 % c. The difference in the of income from operations is due to the difference in the operating leverages. Beck Inc.'s operating leverage means that its fixed costs are a 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
Beck Inc. and Bryant Inc. have the following operating data:
| Beck Inc. | Bryant Inc. | |||
| Sales | $325,700 | $1,000,000 | ||
| Variable costs | 130,700 | 600,000 | ||
| Contribution margin | $195,000 | $400,000 | ||
| Fixed costs | 120,000 | 200,000 | ||
| Income from operations | $75,000 | $200,000 |
a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.
| Beck Inc. | fill in the blank 1 |
| Bryant Inc. | fill in the blank 2 |
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. | $fill in the blank 3 | fill in the blank 4 | % |
| Bryant Inc. | $fill in the blank 5 | fill in the blank 6 | % |
c. The difference in the
of income from operations is due to the difference in the operating leverages. Beck Inc.'s
operating leverage means that its fixed costs are a
percentage of contribution margin than are Bryant Inc.'s.
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