The degree of operating leverage for Montana Corp. and APK Co. are 1.6 and 5.7, respectively. Both have net incomes of $50,670. Determine their respective contribution margins.
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- The following CVP income statements are available for Wildhorse Corp. and Blossom, Inc. Wildhorse Corp. Blossom, Inc. Sales revenue $854,000 $854,000 * Variable costs 396,500 228,750 Contribution margin 457,500 625,250 Fixed costs 305,000 472,750 Net income $152,500 $152,500 (a) Compute the degree of operating leverage for each company. (Round answers to 1 decimal place, e.g. 15.5.) Degree of Operating Leverage Wildhorse BlossomSheridan Corp. had total variable costs of $148,200, total fixed costs of $139,200, and total revenues of $285,000. (a1) Calculate contribution margin ratio. Contribution margin ratio %What will be the company's contribution margin?
- The single-column CVP income statements shown below are available for Wildhorse Company and Blossom Company, Sales Variable costs Contribution margin Fixed costs Net income Wildhorse Wildhorse Co. Blossom $495,000 239,000 256,000 1000 156,000 $100,000 Blossom Co. Degree of Operating Leverage $495,000 (a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e.g. 1.15.) $ 51,000 444,000 344,000 $100,000 (b) Assuming that sales revenue increases by 10% (due to a 10% increase in the number of units sold), prepare a single-plumn CVP income statement for each company. Wildhorse Company $ tA $ Blossom CompanyThe following income statement applies to Munoz Company for the current year: Income Statement Sales revenue (440 units x $34) Variable cost (440 units x $19) Contribution margin Fixed cost 3 Net income $14,960 (8,360) 6,600 (4,400) $2,200 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Munoz Company will earn if it experiences a 10 percent increase in revenue. The sales price per unit is not affected. c-1. Verify your answer to Requirement b by constructing an income statement based on a 10 percent increase in sales revenue. The sales price is not affected. c-2. Calculate the percentage change in net income for the two income statements. Complete this question by entering your answers in the tabs below. Req A and B Req C1 Req C2 a. Use the contribution margin approach to calculate the magnitude of operating leverage. b.…What is the company's total contribution margin ?
- Frontier Corp. has a contribution margin of $1,682,000 and profit of $336,400. What is its degree of operating leverage? Multiple Choice 0.20 5.80 14.50 5.00Singh Co. reports a contribution margin of $960,000 and fixed costs of $720,000. (1) Compute the company’s degree of operating leverage. (2) If sales increase by 15%, what amount of income will Singh Co. expect?The CVP income statements shown below are available for Armstrong Company and Contador Company. Armstrong Co. Contador Co. Sales $494,000 $494,000 Variable costs 233,000 45,000 Contribution margin 261,000 449,000 Fixed costs 161,000 349,000 Net income $100,000 $100,000 (a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, eg. 1.15.) Degree of Operating Leverage Armstrong Contador (b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for each company. Armstrong Company Contador Company > > > > >
