Income statements for two different companies in the same industry are as follows:
Duncan Mac...
Income statements for two different companies in the same industry are as follows:
Duncan Macduff
Sales $375,000 $375,000
Total variable cost 300,000 150,000
Contribution margin $75,000 $225,000
Total fixed cost 50,000 200,000
Operating income $25,000 $25,000
Required:
Required:
1. Compute the degree of operating leverage for each company.
2. Conceptual Connection: Compute the break-even point for each company. Round to the nearest dollar.
3. Conceptual Connection: Suppose that both companies experience a 30% increase in revenues. Compute the percentage change in profits for each company.
Answers: 2
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