The following income statement is provided for Vargas, Inc. Sales revenue (2,500 units x $60 per unit) $150,000 Cost of goods sold (variable; 2,500 units × $20 (50,000) per unit) Cost of goods sold (fixed) Gross margin Administrative salaries Depreciation Supplies (2,500 units x $4 per unit) Net income What is this company's magnitude of operating leverage? Multiple Choice 3.07 0.33 3.00 (8,000) 92,000 (42,000) (10,000) (10,000) $ 30,000

The following income statement is provided for Vargas, Inc. Sales revenue (2,500 units x $60 per unit) $150,000 Cost of goods sold (variable; 2,500 units × $20 (50,000) per unit) Cost of goods sold (fixed) Gross margin Administrative salaries Depreciation Supplies (2,500 units x $4 per unit) Net income What is this company's magnitude of operating leverage? Multiple Choice 3.07 0.33 3.00 (8,000) 92,000 (42,000) (10,000) (10,000) $ 30,000

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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hre.2
A2
Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $275,600 $882,000 Variable costs 110,600 529,200 Contribution margin $165,000 $352,800 Fixed costs 110,000 205,800 Income from operations $55,000 $147,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Вeck Inc. Bryant Inc. 2.4 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 Вeck Inc. $ 33,000 60 V % Bryant Inc. 70,560 57 X % c. The difference in the increases of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher v operating leverage means that its fixed costs are a larger percentage of contribution margin than are Bryant Inc.'s.
REQUIRED: How much is the company's overall income?
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Number 3
= Required Supply the missing information in the following table for Zachary Company: Note: Do not round intermediate calculations. Round "ROI" answer to 2 decimal places. (i.e., 0.2345 shoule Sales ROI Operating assets Operating income Turnover Residual income Operating profit margin Desired rate of return $ 309,600 1.8 % 13 % 19%
Sales revenue is $11,250,000 Variable expenses is $2,500,000 Total expenses is $8,750,000 Operating income is $2,5000,000 How would you find the degree of operating leverage?
A1 please help.....
Sales 560,053 Variable expenses, 334,667 Fixed expenses 48,673 Compute the degree of operating leverage rounded to two decimal places. Enter only the amount for the degree of operating leverage rounded to two decimal places based on general rounding rules In the box provided below. Enter the amount only. Do not enter letters, words, or the calculation.
Consider the following summary modified income statement for Tech Inc.: Sales $593,000 Variable Operating Costs 252,000 Contribution Margin $341,000 Fixed Operating Costs 121,000 Operating Income $220,000 Interest Expense 26,000 Net Income $194,000 Calculate Tech's degree of operating leverage. A В C E 1 2 Degree of Operating Leverage = 4 5 7 8 9 10 3. 6.
Using the Van Accessible data from Table 5–4: Calculate the degree of operating leverage (DOL). Calculate the degree of financial leverage (DFL). Calculate the degree of combined leverage (DCL). Explain what DOL, DFL, and DCL mean.