2 The single-column CVP income statements shown below are available for Sandhill Company and Wildhorse Company.SalesVariable costsContribution marginFixed costsNet incomeSandhillSandhill Co.Wildhorse$506,000242,000264,000164,000$100,000Wildhorse Co.$506,000Degree of Operating Leverage55,000451,000(a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e.g. 1.15.)351,000$100,000(b) Assuming that sales revenue increases by 10% (due to a 10% increase in the number of units sold), prepare a single-column CVPincome statement for each company.

Lets understand the basics.Degree of operating leverage indicates how much net operating income gets…

The single-column CVP income statements shown below are available for Sandhill Company and Wildhorse Company. Sales Variable costs Contribution margin Fixed costs Net income Sandhill Co. $506,000 242,000 264.000 164,000 $100,000 Wildhorse Co. $506,000 55,000 451,000 351,000 $100,000

The single-column CVP income statements shown below are available for Sandhill Company and Wildhorse Company. Sales Variable costs Contribution margin Fixed costs Net income Sandhill Co. $506,000 242,000 264.000 164,000 $100,000 Wildhorse Co. $506,000 55,000 451,000 351,000 $100,000

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 18E

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Question

The single-column CVP income statements shown below are available for Sandhill Company and Wildhorse Company.
Sales
Variable costs
Contribution margin
Fixed costs
Net income
Sandhill
Sandhill Co.
Wildhorse
$506,000
242,000
264,000
164,000
$100,000
Wildhorse Co.
$506,000
Degree of Operating Leverage
55,000
451,000
(a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e.g. 1.15.)
351,000
$100,000
(b) Assuming that sales revenue increases by 10% (due to a 10% increase in the number of units sold), prepare a single-column CVP
income statement for each company.

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