(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.

Question

Want to see the full answer?

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Accounting

Savannah Construction reported beginning total assets of $1,100,000 and ending total assets of $1,200,000 for 2020. Its net income for this period was $520,000, and its net sales were $3,000,000. Compute the company's asset turnover for 2020.

Solve question

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

Want to see the full answer?

Check out a sample textbook solution

See solution

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

Want to see the full answer?

Check out a sample textbook solution

See solution

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

Want to see the full answer?

Check out a sample textbook solution

See solution

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

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 6 - Identify and briefly describe the assumptions of...Ch. 6 - Why should managers create a CVT graph?Ch. 6 - When considering a CVP graph, how is the...Ch. 6 - Your supervisor has requested that you prepare a...Ch. 6 - Why is it important for a company to know its...Ch. 6 - Explain the difference between unit contribution...Ch. 6 - A Company’s Cost structure can have a high...Ch. 6 - Prob. 8Q Ch. 6 - Prob. 9Q Ch. 6 - Bert Company and Ernie Company are competitors in...

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.

Want to see the full answer?

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.

Want to see the full answer?

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.