Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: ...
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Accounting
Operating Leverage
Beck Inc. and Bryant Inc. have the following operating data:
| Beck Inc. | Bryant Inc. | |||
| Sales | $374,100 | $1,122,000 | ||
| Variable costs | 150,100 | 673,200 | ||
| Contribution margin | $224,000 | $448,800 | ||
| Fixed costs | 154,000 | 261,800 | ||
| Income from operations | $70,000 | $187,000 | ||
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 15%? 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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