Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $355,700 $950,000 Variable costs 142,700 570,000 Contribution margin $213,000 $380,000 Fixed costs 142,000 190,000 Income from operations $71,000 $190,000 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 20%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. $ % 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.
Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $355,700 $950,000 Variable costs 142,700 570,000 Contribution margin $213,000 $380,000 Fixed costs 142,000 190,000 Income from operations $71,000 $190,000 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 20%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. $ % 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Operating Leverage
Beck Inc. and Bryant Inc. have the following operating data:
| Beck Inc. | Bryant Inc. | |||
| Sales | $355,700 | $950,000 | ||
| Variable costs | 142,700 | 570,000 | ||
| Contribution margin | $213,000 | $380,000 | ||
| Fixed costs | 142,000 | 190,000 | ||
| Income from operations | $71,000 | $190,000 |
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 20%? If required, round answers to nearest whole number.
| Dollars | Percentage | ||
| Beck Inc. | $ | % | |
| 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.
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