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Spring Company's cost structure is dominated by variable costs with a contribution margin ratio of...

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Accounting

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Spring Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.20 and fixed costs of $60,000. Every dollar of sales contributes 20 cents toward fixed costs and profit. The cost structure of a competitor, Winters Company, is dominated by fixed costs with a higher contribution margin ratio of 0.70 and fixed costs of $310,000. Every dollar of sales contributes 70 cents toward fixed costs and profit. Both companies have sales of $500,000 per month. Required: a. Compare the two companies' cost structures. SPRING COMPANY WINTERS COMPANY Amount Percentage Amount Percentage Sales Variable cost Contribution margin Fixed costs Operating profit b. Suppose that both companies experience a 8 percent increase in sales volume. By how much would each company's profits increase? Spring Company's profits increase by Winter Company's profits increase by

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