Use the following information to answer the Q1 and Q2: Price Per Unit Units Sold Variable Costs Fixed Costs Company A $30 100,000 20% a) Company A bl Company B $800,000 a) Company A: 1.88, Company B: 2.14 b) Company A: 1.50, Company B: 1.29 c) Company A: 1.71, Company B: 1.13 d) Company A: 1.25, Company B: 1.67 Company B $30 100,000 40% Q1. What is the degree of operating leverage for Company A and Company B? (Round to two decimal places) $400,000 Q2. The IMF just released its global growth forecast for next year of 5.5%. What firm is likely to perform better under this scenario?
Use the following information to answer the Q1 and Q2: Price Per Unit Units Sold Variable Costs Fixed Costs Company A $30 100,000 20% a) Company A bl Company B $800,000 a) Company A: 1.88, Company B: 2.14 b) Company A: 1.50, Company B: 1.29 c) Company A: 1.71, Company B: 1.13 d) Company A: 1.25, Company B: 1.67 Company B $30 100,000 40% Q1. What is the degree of operating leverage for Company A and Company B? (Round to two decimal places) $400,000 Q2. The IMF just released its global growth forecast for next year of 5.5%. What firm is likely to perform better under this scenario?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Use the following information to answer the Q1 and Q2:
Company A
Company B
Price Per Unit
Units Sold
Variable Costs
Fixed Costs
$30
100,000
20%
$800,000
a) Company A: 1.88, Company B: 2.14.
b)
Company A: 1.50, Company B: 1.29
c) Company A: 1.71, Company B: 1.13
d) Company A: 1.25, Company B: 1.67
a) Company A
b)
Company B
$30
100,000
40%
Q1. What is the degree of operating leverage for Company A
and Company B? (Round to two decimal places)
$400,000
Q2. The IMF just released its global growth forecast for next
year of 5.5%. What firm is likely to perform better under this
scenario?
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