The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution...
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The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of and fixed costs of $ Every dollar of sales contributes cents toward fixed costs and profit. The cost structure of a competitor, Oakfield Convenience Store, is dominated by fixed costs with a higher contribution margin ratio of and fixed costs of $ Every dollar of sales contributes cents toward fixed costs and profit. Both companies have sales of $ for the year. Required: Compare the two companies cost structures. Suppose that both companies experience a percent increase in sales volume. By how much would each companys profits increase?
The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of and fixed costs of $ Every dollar of sales contributes cents toward fixed costs and profit. The cost structure of a competitor, Oakfield Convenience Store, is dominated by fixed costs with a higher contribution margin ratio of and fixed costs of $ Every dollar of sales contributes cents toward fixed costs and profit. Both companies have sales of $ for the year.
Required:
Compare the two companies cost structures.
Suppose that both companies experience a percent increase in sales volume. By how much would each companys profits increase?
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