Determine smittech enterprises operating leverage SmitTech Enterprises reports the following data:SalesVariable CostsFixed Costs$380,000$200,000Contribution Margin $180,000$90,000Income from Operations $90,000Determine SmitTech Enterprises' operatingleverage.

Operating Leverage = Contribution Margin / Income from OperationsContribution Margin =…

Answered: SmitTech Enterprises reports the…

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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Rings Company has three product lines, A, B, and C. The following financial information is available: Item Product Line A Product Line B Product Line C Sales $ 66,000 $ 135,000 $ 30,000 Variable costs $ 39,600 $ 72,000 $ 18,750 Contribution margin $ 26,400 $ 63,000 $ 11,250 Fixed costs: Avoidable $ 6,100 $ 18,000 $ 8,400 Unavoidable $ 4,800 $ 13,500 $ 3,800 Pre-tax operating income $ 15,500 $ 31,500 $ (950) If Product Line C is discontinued and the manufacturing space formerly devoted to this line is rented for $6,000 per year, pre-tax operating income for the company will likely: Multiple Choice Be unchanged—the two effects cancel each other out. Increase by $1,950. Increase by $3,150. Increase by $5,850. Increase by some other amount.
Diamond Company has three product lines, A, B, and C. The following financial information is available: Item Product Line A Product Line B Product Line C Sales $ 52,000 $ 100,000 $ 23,000 Variable costs $ 31,200 $ 53,000 $ 14,375 Contribution margin $ 20,800 $ 47,000 $ 8,625 Fixed costs: Avoidable $ 5,400 $ 14,500 $ 6,300 Unavoidable $ 4,100 $ 10,000 $ 3,100 Pre-tax operating income $ 11,300 $ 22,500 $ (-775 ) Diamond is thinking of dropping Product Line C because it is reporting an operating loss. Assuming the company drops Product Line C and does not replace it, pre-tax operating income for the firm will likely: Multiple Choice Be unchanged Increase by $2,025 Increase by $2,325 Decrease by $2,325 Decrease by $4,350
Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $295,300 $834,000 Variable costs 118,500 500,400 Contribution margin $176,800 $333,600 Fixed costs 124,800 194,600 Income from operations $52,000 $139,000 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 20%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. $ % Bryant Inc. $ % 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.
The following information is for Alex Corp: Product X: Revenue Variable Cost Product Y: Revenue Variable Cost Total fixed costs $12.00 $4.50 $25.00 $10.00 $40,500 What is the operating income, assuming actual sales total 120,000 units, and the sales mix is two units of Product X and one unit of Product Y? 1,960,000 1,240,500 1,200,000 1,159,500
Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $374,700 $1,056,000 Variable costs 150,300 633,600 Contribution margin $224,400 $422,400 Fixed costs 158,400 246,400 Income from operations $66,000 $176,000 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 20%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. $ % Bryant Inc. $ %
Teague Co. reports the following data: Sales $725,000 Variable costs 373,000 Contribution margin $352,000 Fixed costs 132,000 Income from operations $220,000 Determine Teague Co.'s operating leverage. Round your answer to one decimal place.
Teague Co. reports the following data: Sales $489,300 Variable costs 278,900 Contribution margin $210,400 Fixed costs 170,700 Income from operations $39,700 Determine Teague Co.’s operating leverage. Round your answer to one decimal place.fill in the blank 1
Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $326,000 $978,000 Variable costs 130,800 586,800 Contribution margin $195,200 $391,200 Fixed costs 134,200 228,200 Income from operations $61,000 $163,000 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.
Tucker Co. reports the following data: Line Item Description Amount Sales $911,900 Variable costs (611,000) Contribution margin $300,900 Fixed costs (219,600) Operating income $81,300 Determine Tucker Co.’s operating leverage. Round your answer to one decimal place.fill in the blank 1 of 1
Tucker Company reports the following data: Sales $415,400 Variable costs 278,300 Contribution margin $137,100 Fixed costs 112,200 Income from operations $24,900 Determine Tucker Company's operating leverage. Round your answer to one decimal place.fill in the blank 1
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Snellville Co. reports the following data: Sales $687,100 Variable costs 474,100 Contribution margin $213,000 Fixed costs 170,400 Income from operations $42,600 Determine Snellville Company's operating leverage. Round your answer to one decimal place.fill in the blank 1

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SmitTech Enterprises reports the following data: Sales Variable Costs Fixed Costs $380,000 $200,000 Contribution Margin $180,000 $90,000 Income from Operations $90,000 Determine SmitTech Enterprises' operating leverage.