1.
Concept Introduction:
Income: Income refers to the earnings that are earned by the company after selling its products in the market. It can be determined by deducting the fixed cost from the contribution margin.
Degree of Operating leverage: Degree of operating leverage measures the effects that arise due to the changes in the level of sales with respect to income.
Income of Company S.
2.
Concept Introduction:
Degree of Operating leverage: Degree of operating leverage measures the effects that arise due to the changes in the level of sales with respect to income.
Degree of Operating leverage.
3.
Concept Introduction:
Income: Income refers to the earnings that are earned by the company after selling its products in the market. It can be determined by deducting the fixed cost from the contribution margin.
Degree of Operating leverage: Degree of Operating leverage measures the effects that arise due to the changes in the level of sales with respect to income.
The expected income if sales are increased by 15%.
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FUNDAMENTAL ACCOUNTING PRINCIPLES
- Operating leverage Asha Inc. and Samir Inc. have the following operating data: Sales Variable costs Contribution margin Fixed costs Asha Inc. Asha Inc. Samir Inc. $265,500 (106,500) $159,000 (106,000) $53,000 $ $ Operating income a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. Samir Inc. Samir Inc. b. How much would operating income increase for each company if the sales of each increased by 10% ? If required, round answers to nearest whole number. Dollars Percentage $781,000 (468,600) $312,400 (170,400) $142,000 c. The difference in the contribution margin than are Samir Inc.'s. % % of operating income is due to the difference in the operating leverages. Asha Inc.'s operating leverage means that its fixed costs are a percentage ofarrow_forwardNeed answer with correct calculationarrow_forwardCalculate the Operating Leverage for a business given the following data: Sales = $300,000.00 Variable Costs = 75% of Sales Operating Income = $40,000.00 Group of answer choices a. 0 b. 7.500 c. 1.875 d. 1.333arrow_forward
- Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $238,500 $728,000 Variable costs 95,700 436,800 Contribution margin $142,800 $291,200 Fixed costs 100,800 179,200 Income from operations $42,000 $112,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Beck Inc. ______________ Bryant Inc. ______________ b. How much would income from operations increase for each company if the sales of each increased by 15%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. $____________ ______________ % Bryant Inc. $___________ ______________ %arrow_forwardOperating 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_forwardOperating 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.arrow_forward
- Please help mearrow_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
- Operating leverage Beck Inc. and Bryant Inc.have the following operating data: Beck Inc. Bryant Inc. Sales $1,250,000 $2,000,000 Variable costs 750,000 1,250,000 Contribution margin $500,000 $ 750,000 Fixed costs 400,000 450,000 Income from operations $ 100,000 $300,000 a.Compute the operating leverage for Beck Inc.and Bryant Inc. b.How much would income from operations increase for each company if the sales of each increased by 20%? c.Why is there a difference in the increase in income from operations for the two companies? Explain.arrow_forward• Assume that the operating results for last year were as follows: Sales $360,000 Less: Varlable expenses 144.000 Contribution margin 216.000 Less: Fixed expenses 180.000 Net operating income $ 36,000 a. Compute the degree of operating leverage at the current level of sales. Degree of operating leveragearrow_forwardOperating 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_forward
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