Operating Leverage Income statements for two different companies in the same industry are as follows:...
70.2K
Verified Solution
Link Copied!
Question
Accounting
Operating Leverage
Income statements for two different companies in the same industry are as follows:
| Trimax, Inc. | Quintex, Inc. | |||
| Sales | $300,000 | $337,500 | ||
| Less: Variable costs | 150,000 | 67,500 | ||
| Contribution margin | $150,000 | $270,000 | ||
| Less: Fixed costs | 120,000 | 240,000 | ||
| Operating income | $30,000 | $30,000 |
Required:
1. Compute the degree of operating leverage for each company.
| Trimax | |
| Quintex |
2. Compute the break-even point in dollars for each company.
| Trimax, Inc. | $ |
| Quintex, Inc. | $ |
Why is the break-even point for Quintex, Inc., higher?
3. Suppose that both companies experience a 40 percent increase in revenues. Compute the percentage change in profits for each company.
| Trimax | % | |
| Quintex | % |
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.