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Use the following information to answer the questions below. Company 1 Company 2 Sales $50,000 $50,000 Variable Costs 10,000 5,000 Contribution Margin 40,000 45,000 Fixed Costs 30,000 40,000 Operating Income 10,000 5,000 A. 270% 1. If Company 1's sales increase by 30%, its operating income will increase by what percent? B. 150% 2. If Company 2's sales increase by 30%, its operating income will increase by what percent? C. 120%

Use the following information to answer the questions below. Company 1 Company 2 Sales $50,000 $50,000 Variable Costs 10,000 5,000 Contribution Margin 40,000 45,000 Fixed Costs 30,000 40,000 Operating Income 10,000 5,000 A. 270% 1. If Company 1's sales increase by 30%, its operating income will increase by what percent? B. 150% 2. If Company 2's sales increase by 30%, its operating income will increase by what percent? C. 120%

FINANCIAL ACCOUNTING
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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Use the following information to answer the questions below. Company 2 Company 1 $50,000 $50,000 Sales 5,000 10,000 Variable Costs 45,000 40,000 Contribution Margin 40,000 30,000 Fixed Costs 5,000 10.000 Operating Income A. 270% V 1. If Company 1's sales increase by 30%, its operating income will increase by what percent? B. 150% V 2. If Company 2's sales increase by 30%, its operating income will increase by what percent? C. 120% D. 90% - v 3. If both Companies 1 and 2 have a 30% decrease in sales, which company's profit will have a greater change? E. 80% F. 37.5% G. 30% H. 10% 1. 9% J. 8% K. 4% L. Company 1 M. Company 2
Transcribed Image Text:Use the following information to answer the questions below. Company 2 Company 1 $50,000 $50,000 Sales 5,000 10,000 Variable Costs 45,000 40,000 Contribution Margin 40,000 30,000 Fixed Costs 5,000 10.000 Operating Income A. 270% V 1. If Company 1's sales increase by 30%, its operating income will increase by what percent? B. 150% V 2. If Company 2's sales increase by 30%, its operating income will increase by what percent? C. 120% D. 90% - v 3. If both Companies 1 and 2 have a 30% decrease in sales, which company's profit will have a greater change? E. 80% F. 37.5% G. 30% H. 10% 1. 9% J. 8% K. 4% L. Company 1 M. Company 2
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