Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant In

Question

Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $295,300 $834,000 Variable costs 118,500 500,400 Contribution margin $176,800 $333,600 Fixed costs 124,800 194,600 Income from operations $52,000 $139,000 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 20%? 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.

Explanation / Answer

particulatrs beck bryant

sales 295300 834000

variable cost 118500 500400

contribution 176800 333600

operating income 52000 139000

contribution margin 60% 40%

(contribution/sales*100)

operating margin 18% 17%

operating leverage 3 2

(contribution margin/operating margin)

B-(Increase of 20%)

sales 354360 1000800

variable cost 142200 600480

contribution 212160 400320

fixed costs(remain same) 124800 194600

revised operating income 87360 205720

(contribution-fixed costs)

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