The following information is available for the Blue and Red Companies for 2011. Blue Red Sales (200,000 units) $1,800,000 $1,800,000 Variable costs 800,000 1,200,000 Contribution margin 1,000,000 600,000 Fixed costs 500,000 100,000 Net operating income $500,000 $500,000 Compute the operating leverage for each company. Record your answer to one decimal place, if necessary.

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter11: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 11.16E
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The following information is available for the Blue and Red
Companies for 2011.
Blue
Red
Sales (200,000 units) $1,800,000 $1,800,000
Variable costs
800,000 1,200,000
Contribution margin 1,000,000 600,000
Fixed costs
500,000 100,000
Net operating income $500,000 $500,000
Compute the operating leverage for each company.
Record your answer to one decimal place, if necessary.
Transcribed Image Text:The following information is available for the Blue and Red Companies for 2011. Blue Red Sales (200,000 units) $1,800,000 $1,800,000 Variable costs 800,000 1,200,000 Contribution margin 1,000,000 600,000 Fixed costs 500,000 100,000 Net operating income $500,000 $500,000 Compute the operating leverage for each company. Record your answer to one decimal place, if necessary.
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