FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Operating 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_forwardjlp.9arrow_forwardUse the below information to answer the following question. Sales (1,000 units) $ 200,000 Variable costs 110,000 Contribution margin 90,000 Fixed manufacturing costs 40,000 Operating income 50,000 Interest 10,000 Earnings before taxes 40,000 Taxes (30%) 12,000 Net income $ 28,000 Shares Outstanding 1,000 Refer to the table. The degree of financial leverage (DFL) is _____.arrow_forward
- Number 3arrow_forwardIf sales are $325,000, variable costs are 75% of sales, and operating income is $49,200, the operating leverage is A. 5.0 B. 0.0 C. 1.7arrow_forwardIf sales are $295,000, variable costs are 75% of sales, and operating income is $51,500, the operating leverage is a.4.3 b.1.1 c.1.4 d.0.0arrow_forward
- The sales and cost data for two companies in the transportation industry are as follows: X Company Y Company Amount Percent Amount Percent Sales $ 150,000 100.00 $ 150,000 100.00 Variable costs 90,000 60.00 45,000 30.00 Contribution margin 60,000 40.00 105,000 70.00 Fixed costs 34,200 70,250 Operating income (πB) $ 25,800 $ 34,750 X Company's degree of operating leverage (DOL) at the current sales volume level is calculated to be: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_forwardSales revenue is $11,250,000 Variable expenses is $2,500,000 Total expenses is $8,750,000 Operating income is $2,5000,000 How would you find the degree of operating leverage?arrow_forward
- Consider the following summary modified income statement for Tech Inc.: Sales $593,000 Variable Operating Costs 252,000 Contribution Margin $341,000 Fixed Operating Costs 121,000 Operating Income $220,000 Interest Expense 26,000 Net Income $194,000 Calculate Tech's degree of operating leverage. A В C E 1 2 Degree of Operating Leverage = 4 5 7 8 9 10 3. 6.arrow_forwardSales (30,000units) P 150,000 Variable costs 100,800 Contribution margin P 49, 200 Fixed manufacturing costs 24,000 Operating income P 25,200 Interest 18,000 Earnings before taxes P 7,200 Taxes (at 31%) 2,160 Net income P 5,040 Shares outstanding 600 The degree of combined leverage…arrow_forwardneed helparrow_forward
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