FINANCIAL ACCOUNTING
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
$165,000
$505,000
Variable costs
66,200
303,000
Contribution margin
$98,800
$202,000
Fixed costs
60,800
101,000
Income from operations
$38,000
$101,000
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 10%? If required, round answers to nearest whole number.
Dollars
Percentage
Beck Inc.
$4
%
Bryant Inc.
c. The difference in the
of income from operations is due to the difference in the operating leverages. Beck Inc.'s
operating leverage means
that its fixed costs are a
percentage of contribution margin than are Bryant Inc.'s.
Noxt
%24
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Transcribed Image Text:rive - Google Drive 4 My Drive - Google Drive + Front Desk Operations 2020 - Go X akeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=D&inprogress%3false ☆ Tp ix 02 TVCC Email P My Math Lab Log In to Canvas EX Mathway | Calculus... N Netflix , Cengage Login Login 国R. Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $165,000 $505,000 Variable costs 66,200 303,000 Contribution margin $98,800 $202,000 Fixed costs 60,800 101,000 Income from operations $38,000 $101,000 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 10%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. $4 % Bryant Inc. c. The difference in the of income from operations is due to the difference in the operating leverages. Beck Inc.'s operating leverage means that its fixed costs are a percentage of contribution margin than are Bryant Inc.'s. Noxt %24
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