(a) Concept introduction: Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity. When the two businesses are compared, the business with highest sale, highest gross profit margin and lower variable cost is more beneficial. Operating leverage = contribution margin profit To compute: The operating leverage of R and A.

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Answer 1

Question

Chapter 6, Problem 15E

To determine

(a)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

When the two businesses are compared, the business with highest sale, highest gross profit margin and lower variable cost is more beneficial.

Operating leverage =contribution marginprofit

To compute:

The operating leverage of R and A.

To determine

(b)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

To compute:

The reason that the companies with the same total sales and net operating income can have different degrees of operating leverage.

To determine

(c)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

Both companies’ vulnerability to market fluctuations.

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Answer 2

Question

Chapter 6, Problem 15E

To determine

(a)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

When the two businesses are compared, the business with highest sale, highest gross profit margin and lower variable cost is more beneficial.

Operating leverage =contribution marginprofit

To compute:

The operating leverage of R and A.

To determine

(b)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

To compute:

The reason that the companies with the same total sales and net operating income can have different degrees of operating leverage.

To determine

(c)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

Both companies’ vulnerability to market fluctuations.

Expert Solution & Answer

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Answer 3

Question

Chapter 6, Problem 15E

To determine

(a)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

When the two businesses are compared, the business with highest sale, highest gross profit margin and lower variable cost is more beneficial.

Operating leverage =contribution marginprofit

To compute:

The operating leverage of R and A.

To determine

(b)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

To compute:

The reason that the companies with the same total sales and net operating income can have different degrees of operating leverage.

To determine

(c)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

Both companies’ vulnerability to market fluctuations.

Expert Solution & Answer

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Answer 4

Question

Chapter 6, Problem 15E

To determine

(a)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

When the two businesses are compared, the business with highest sale, highest gross profit margin and lower variable cost is more beneficial.

Operating leverage =contribution marginprofit

To compute:

The operating leverage of R and A.

To determine

(b)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

To compute:

The reason that the companies with the same total sales and net operating income can have different degrees of operating leverage.

To determine

(c)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

Both companies’ vulnerability to market fluctuations.

Expert Solution & Answer

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Answer 5

Chapter 6, Problem 15E

To determine

(a)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

When the two businesses are compared, the business with highest sale, highest gross profit margin and lower variable cost is more beneficial.

Operating leverage =contribution marginprofit

To compute:

The operating leverage of R and A.

To determine

(b)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

To compute:

The reason that the companies with the same total sales and net operating income can have different degrees of operating leverage.

To determine

(c)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

Both companies’ vulnerability to market fluctuations.

Answer 6

Chapter 6, Problem 15E

To determine

(a)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

When the two businesses are compared, the business with highest sale, highest gross profit margin and lower variable cost is more beneficial.

Operating leverage =contribution marginprofit

To compute:

The operating leverage of R and A.

Answer 7

Chapter 6, Problem 15E

To determine

(a)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

When the two businesses are compared, the business with highest sale, highest gross profit margin and lower variable cost is more beneficial.

Operating leverage =contribution marginprofit

To compute:

The operating leverage of R and A.

Answer 8

To determine

(b)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

To compute:

The reason that the companies with the same total sales and net operating income can have different degrees of operating leverage.

Answer 9

To determine

(b)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

To compute:

The reason that the companies with the same total sales and net operating income can have different degrees of operating leverage.

Answer 10

To determine

(c)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

Both companies’ vulnerability to market fluctuations.

Answer 11

To determine

(c)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

Both companies’ vulnerability to market fluctuations.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

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Solution Summary: The author explains that operating leverage is a cost-accounting formula that shows the percentage or degree increase in the operating income if the company increases its revenue or sale quantity.

(c)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

Both companies’ vulnerability to market fluctuations.

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Chapter 6 Solutions

Solution Summary: The author explains that operating leverage is a cost-accounting formula that shows the percentage or degree increase in the operating income if the company increases its revenue or sale quantity.

(c) Concept introduction: Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity. Both companies’ vulnerability to market fluctuations.

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Chapter 6 Solutions

(c)

Concept introduction:

Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.

Both companies’ vulnerability to market fluctuations.