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Shown here are condensed income statements for two different companies (assume no income taxes). Miller Company Sales $ 1,400,000 Variable expenses (80%)   1,120,000 Income before interest   280,000 Interest expense (fixed)   74,000 Net income $ 206,000     Weaver Company Sales $ 1,400,000 Variable expenses (60%)   840,000 Income before interest   560,000 Interest expense (fixed)   354,000 Net income $ 206,000   What happens to each company's net income if sales increase by 40%

Shown here are condensed income statements for two different companies (assume no income taxes). Miller Company Sales $ 1,400,000 Variable expenses (80%)   1,120,000 Income before interest   280,000 Interest expense (fixed)   74,000 Net income $ 206,000     Weaver Company Sales $ 1,400,000 Variable expenses (60%)   840,000 Income before interest   560,000 Interest expense (fixed)   354,000 Net income $ 206,000   What happens to each company's net income if sales increase by 40%

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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Shown here are condensed income statements for two different companies (assume no income taxes).

Miller Company
Sales $ 1,400,000
Variable expenses (80%)  

1,120,000
Income before interest   280,000
Interest expense (fixed)   74,000
Net income $

206,000
 

 

Weaver Company
Sales $ 1,400,000
Variable expenses (60%)  

840,000
Income before interest   560,000
Interest expense (fixed)   354,000
Net income $

206,000
 

What happens to each company's net income if sales increase by 40%

The following information applies to the questions displayed below: Shown here are condensed income statements for two different companies (assume no income taxes). **Miller Company** - Sales: $1,400,000 - Variable expenses (80%): $1,120,000 - Income before interest: $280,000 - Interest expense (fixed): $74,000 - Net income: $206,000 **Weaver Company** - Sales: $1,400,000 - Variable expenses (60%): $840,000 - Income before interest: $560,000 - Interest expense (fixed): $354,000 - Net income: $206,000 --- **Problem 11-5A Part 2** 2. What happens to each company's net income if sales increase by 40%? (Round your answers to the nearest whole percent.) | Company | Net income | |------------|---------------| | Miller Co. | Increases by 6% | | Weaver Co. | Increases by 6% |
Transcribed Image Text:The following information applies to the questions displayed below: Shown here are condensed income statements for two different companies (assume no income taxes). **Miller Company** - Sales: $1,400,000 - Variable expenses (80%): $1,120,000 - Income before interest: $280,000 - Interest expense (fixed): $74,000 - Net income: $206,000 **Weaver Company** - Sales: $1,400,000 - Variable expenses (60%): $840,000 - Income before interest: $560,000 - Interest expense (fixed): $354,000 - Net income: $206,000 --- **Problem 11-5A Part 2** 2. What happens to each company's net income if sales increase by 40%? (Round your answers to the nearest whole percent.) | Company | Net income | |------------|---------------| | Miller Co. | Increases by 6% | | Weaver Co. | Increases by 6% |
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