Texts:
Chapter 21 - Pool
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Operating Leverage: Beck Inc. and Bryant Inc. have the following operating data:
Beck Inc. Bryant Inc.
Sales: $1,250,000 $2,000,000
Variable costs: $750,000 $1,250,000
Contribution margin: $500,000 $750,000
Fixed costs: $400,000 $450,000
Income from operations: $100,000 $OOO'OOES
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 increase by 10%?
Beck Inc. Bryant Inc.
Number Dollars Percentage Number Dollars Percentage
of income from operations is due to the difference in the operating leverages.
Beck Inc. Bryant Inc.
c. The difference in the percentage of contribution margin than are Bryant Inc.'s operating leverage means that its fixed costs are.