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 D E

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 D E

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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If sales equal $331,220, variable expenses equal $200,000, and the degree of operating leverage is 18, then the net operating income is: Multiple Choice $11,111. $18,401. $7,290. $25,691.
Q5. Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $330,700 $1,056,000 Variable costs (132,700) (633,600) Contribution margin $198,000 $422,400 Fixed costs (132,000) (246,400) Operating income $66,000 $176,000 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 operating income 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 operating income 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.
If the sales of business x are $ 150.000 , variable cost is $ 45.000 , fixed cost is $ 15.000 and EBIT is $ 30.000 , what is the operating leverage of this business ? a.5 b.4 c.3 d.4,5 e.3,5
Understanding CVP relationships Calculate the missing amounts for each of thefollowing firms: Contribution Variable Margin Fixed OperatingSales Costs Ratio Costs Income (Loss)Firm A $320,000 ? 32% ? $38,300Firm B ? $465,050 ? $118,000 71,950Firm C 134,000 ? 26% 36,700 ?Firm D ? 59,000 20% ? (4,920)
The CVP income statements shown below are available for Blossom Company and Crane Company. Blossom Co. $600,000 320,000 Sales revenue Variable costs Contribution margin Fixed costs Operating income (a1) Blossom Co. Calculate the degree of operating leverage for each company. (Round answer to 2 decimal places, e.g. 15.25.) Crane Co. 280,000 180,000 $100,000 Save for Later Crane Co. $600.000 120,000 480,000 380,000 $100,000 Operating leverage Attempts: 0 of 1 used Submit Answer
DEF Inc. gives the following information. Sales 10,494$ Variable Costs $3,498 Fixed costs $1,817 Interest expense $1,000 Calculate the Degree of Financial Leverage. Answer to be in 2 decimals.
The following information is available for Concord Corporation: Total fixed $150000 expenses == Total variable. 320000 expenses Sales Cost of goods sold $570000 370000 A CVP income statement would report O gross profit of $250000, contribution margin of $420000. Ogross profit of $200000. O contribution margin of $250000.
Alpha Corporation reported the following data for its most recent year: sales, $1,000,000; variable expenses, $600,000; and fixed expenses, $300,000. The company's degree of operating leverage is closest to: Multiple Choice о О 20 3.3 0.25 о 4.0
• Assume that the operating results for last year were as follows: Sales $360,000 Less: Varlable expenses 144.000 Contribution margin 216.000 Less: Fixed expenses 180.000 Net operating income $ 36,000 a. Compute the degree of operating leverage at the current level of sales. Degree of operating leverage
Given the following income statement for OR company for 20X4: Sales (30,000 units) P 600,000 Less operating expenses: Variable P 390,000 Fixed 140,000 530,000 Net income P 70,000 The company’s degree of operating leverage is a. 3 b. 2 c. 4.28 d. 8.57
E6.14 (LO 4), AN The single-column CVP income statements shown below are available for Armstrong Company and Contador Company. Armstrong Co. Contador Co.Sales $500,000 $500,000Variable costs 240,000 50,000Contribution margin 260,000 450,000Fixed costs 160,000 350,000Net income $100,000 $100,000Instructions Compute the degree of operating leverage for each company and interpret your results.Assuming that sales revenue increases by 10%, restate the single-column CVP income statement from above for each company.Discuss how the cost structure of these two companies affects their operating leverage and profitability.Compute degree of operating leverage and evaluate impact of alternative cost structures on net income and margin of safety.
Alpha Corporation reported the following data for its most recent year: sales, $670,000; variable expenses, $420,000; and fixed expenses, $200,000. The company's degree of operating leverage is closest to: Multiple Choice O 5.00 2.70 2.00 13.00

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