The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0 45 and foxed costs of $122.400. Every dollar of sales contributes 45 cents toward fored costs and profit The cost structure of a competitor One Mart, is dominated by foed costs with a higher contribution margin ratio of O70 and foxed costs of $249.900 Every dollar of sales contributes 70 cents toward fixed costs and profe Both companies have sales of $510.000 for the month Required . Compare the two companies' cost structures b. Suppose that both companies experience a 15 percent increase in sales volume By how much would each company's profits increase Complete this question
The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0 45 and foxed costs of $122.400. Every dollar of sales contributes 45 cents toward fored costs and profit The cost structure of a competitor One Mart, is dominated by foed costs with a higher contribution margin ratio of O70 and foxed costs of $249.900 Every dollar of sales contributes 70 cents toward fixed costs and profe Both companies have sales of $510.000 for the month Required . Compare the two companies' cost structures b. Suppose that both companies experience a 15 percent increase in sales volume By how much would each company's profits increase Complete this question
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0 45 and fixed costs of
$122,400. Every dollar of sales contributes 45 cents toward fored costs and profit. The cost structure of a competitor, One-Mart, is
dominated by foxed costs with a higher contribution margin ratio of 070 and foed costs of $249.900 Every dollar of sales contributes
70 cents toward fixed costs and profit. Both companies have sales of $510,000 for the month
Required:
a. Compare the two companies' cost structures
b. Suppose that both companies experience a 15 percent increase in sales volume By how much would each company's profits
increase
Complete this question by entering your answers in the tabs below.
Required A
Required
Compare the two companies' cost structures
GREENDACK STORE
ONE MART
Amount
Percentage
Amount
Percentage
Sales
Variable cost
Contribuon margin
Fied costs
Operating prot
Reued>
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