Financial & Managerial Accounting
14th Edition
ISBN: 9781337119207
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 19, Problem 19.6BE
To determine
Operating leverage: It is a ratio that measures the proportion of fixed cost on the total costs and the extent to which the changes in the sales volume affects the income from operations. It shows the relationship between the contribution margin and income from operations. The formula to calculate the operating leverage is as follows:
To determine: T Company’s operating leverage
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Operating Leverage
Cartersville Co. reports the following data:
Sales
$485,800
Variable costs
291,500
Contribution margin
$194,300
Fixed costs
156,200
Income from operations
$38,100
Determine Cartersville Company's operating leverage. Round your answer to one decimal place.
Operating leverage
Haywood Co. reports the following data:
Line Item Description
Amount
Sales
$6,160,000
Variable costs
(4,620,000)
Contribution margin
$1,540,000
Fixed costs
(440,000)
Operating income
$1,100,000
Determine Haywood Co.’s operating leverage. Round your answer to one decimal place.
Operating Leverage
Cartersville Co. reports the following data:
Sales
$455,200
Variable costs
(250,400)
Contribution margin
$204,800
Fixed costs
(146,300)
Operating income
$58,500
Determine Cartersville Co.’s operating leverage. Round your answer to one decimal place.
Chapter 19 Solutions
Financial & Managerial Accounting
Ch. 19 - Describe how total variable costs and unit...Ch. 19 - Which of the following costs would be classified...Ch. 19 - Describe how total fixed costs and unit fixed...Ch. 19 - In applying the high-low method of cost estimation...Ch. 19 - If fixed costs increase, what would be the impact...Ch. 19 - Prob. 6DQCh. 19 - If the unit cost of direct materials is decreased,...Ch. 19 - Both Austin Company and Hill Company had the same...Ch. 19 - Prob. 9DQCh. 19 - Prob. 10DQ
Ch. 19 - High-low method The manufacturing costs of...Ch. 19 - Contribution margin Lanning Company sells 160,000...Ch. 19 - Prob. 19.3BECh. 19 - Prob. 19.4BECh. 19 - Prob. 19.5BECh. 19 - Prob. 19.6BECh. 19 - Margin of safety Liu Company has sales of...Ch. 19 - Classify costs Following is a list of various...Ch. 19 - Identify cost graphs The following cost graphs...Ch. 19 - Prob. 19.3EXCh. 19 - Identify activity bases From the following list of...Ch. 19 - Identify fixed and variable costs Intuit Inc....Ch. 19 - Prob. 19.6EXCh. 19 - High-low method Ziegler Inc. has decided to use...Ch. 19 - High-low method for a service company Boston...Ch. 19 - Contribution margin ratio A. Young Company budgets...Ch. 19 - Contribution margin and contribution margin ratio...Ch. 19 - Prob. 19.11EXCh. 19 - Prob. 19.12EXCh. 19 - Break-even sales Currently, the unit selling price...Ch. 19 - Prob. 19.14EXCh. 19 - Prob. 19.15EXCh. 19 - Break even analysis for a service company Sprint...Ch. 19 - Prob. 19.17EXCh. 19 - Prob. 19.18EXCh. 19 - Prob. 19.19EXCh. 19 - Prob. 19.20EXCh. 19 - Prob. 19.21EXCh. 19 - Break-even sales and sales mix for a service...Ch. 19 - Margin of safety A. If Canace Company, with a...Ch. 19 - Prob. 19.24EXCh. 19 - Operating leverage Beck Inc. and Bryant Inc. have...Ch. 19 - Classify costs Seymour Clothing Co. manufactures a...Ch. 19 - Break-even sales under present and proposed...Ch. 19 - Prob. 19.3APRCh. 19 - Prob. 19.4APRCh. 19 - Prob. 19.5APRCh. 19 - Contribution margin, break even sales,...Ch. 19 - Classify costs Cromwell Furniture Company...Ch. 19 - Prob. 19.2BPRCh. 19 - Break even sales and cost-volume-profit chart For...Ch. 19 - Prob. 19.4BPRCh. 19 - Sales mix and break even sales Data related to the...Ch. 19 - Prob. 19.6BPRCh. 19 - Prob. 1ADMCh. 19 - Break-even subscribers for a video service Star...Ch. 19 - Prob. 3ADMCh. 19 - Prob. 19.1TIFCh. 19 - Prob. 19.3TIF
Knowledge Booster
Similar questions
- Operating Leverage Haywood Co. reports the following data: Sales $6,160,000 Variable costs (4,620,000) Contribution margin $1,540,000 Fixed costs (440,000) Operating income $1,100,000 Determine Haywood Co.’s operating leverage. Round your answer to one decimal place.arrow_forwardOperating Leverage Snellville Co.reports the following data: Sales $610,300 Variable costs 335,700 Contribution margin $274,600 Fixed costs 207,600 Income from operations $67,000 Determine Snellville Company's operating leverage. Round your answer to one decimal placearrow_forwardWhat is operating leverage for the info attached? 1.3, 2.7 or 6.7arrow_forward
- Jordan Company has fixed costs of $778,600. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit QQ $280 $160 $120 ZZ 410 360 50 The sales mix for Products QQ and ZZ is 50% and 50%, respectively. Determine the break-even point in units of QQ and ZZ. required, round your answers to the nearest whole number. a. Product QQ units b. Product ZZ unitsarrow_forwardOperating Leverage Snellville Co. reports the following data: Sales $675,600 Variable costs 432,400 Contribution margin $243,200 Fixed costs 180,800 Income from operations $62,400 Determine Snellville Company's operating leverage. Round your answer to one decimal place. 耳 W 99+)arrow_forwardOperating Leverage Felipe Enterprises reports the following data: Sales $330,000 Variable costs 140,000 Contribution margin $190,000 Fixed costs 95,000 Income from operations $ 95,000 Determine Felipe Enterprises's operating leverage.arrow_forward
- Operating Leverage Snellville Co. reports the following data: Sales Variable costs Contribution margin Fixed costs $897,700 (610,400) $287,300 (227,400) $59,900 Operating income Determine Snellville Co.'s operating leverage. Round your answer to one decimal place. Previous A Nexarrow_forwardTom Company reports the following data: Sales Variable costs Fixed costs Determine Tom Company's operating leverage. Round your answer to one decimal place. $156,332 81,532 30,800arrow_forwardOperating leverage Asha Inc. and Samir Inc. have the following operating data: Asha Inc. Sales Variable costs Contribution margin $220,400 (88,400) $132,000 (72,000) $60,000 Samir Inc. Asha Inc. Samir Inc. $640,000 (384,000) $256,000 (95,000) $160,000 Fixed costs Operating income a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. Samir Inc. b. How much would operating income increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage % 9 c. The difference in the increases ✔ of operating income is due to the difference in the operating leverages. Asha Inc.'s higher percentage of contribution margin than are Samir Inc.'s. operating leverage means that its fixed costs are a largerarrow_forward
- Operating Leverage Westminster Co. reports the following data: Sales $875,000 Variable costs 425,000 Contribution margin $450,000 Fixed costs 150,000 Income from operations $300,000 Determine Westminster Co.'s operating leverage. Round your answer to one decimal place.arrow_forwardOperating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $275,600 $882,000 Variable costs 110,600 529,200 Contribution margin $165,000 $352,800 Fixed costs 110,000 205,800 Income from operations $55,000 $147,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Вeck Inc. Bryant Inc. b. How much would income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Вeck Inc. 2$ % Bryant Inc. % c. The difference in the increases of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher operating leverage means that its fixed costs are a larger percentage of contribution margin than are Bryant Inc.'s.arrow_forwardOperating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $275,600 $882,000 Variable costs 110,600 529,200 Contribution margin $165,000 $352,800 Fixed costs 110,000 205,800 Income from operations $55,000 $147,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Вeck Inc. Bryant Inc. 2.4 b. How much would income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Вeck Inc. $ 33,000 60 V % Bryant Inc. 70,560 57 X % c. The difference in the increases of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher v operating leverage means that its fixed costs are a larger percentage of contribution margin than are Bryant Inc.'s.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning