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The following income statement applies to Kawai Company for the current year. Income Statement Sales revenue (200 units X $60) Variable cost (200 units * $36) Contribution margin Pixed cost Net income $12,000 (7,200) 4,800 (1.600) $ 3,200 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Kawal Company will earn if it experiences a 10 percent...
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1. The Famagusta Inn's income statement is as follows: Revenue Variable Costs Contribution Margin Rooms 5,500,000 1,200,000 4,300,000 Food 3,000,000 1,000,000 2,000,000 Total 8,500,000 2,200,000 6,300,000 Fixed Costs Pretax Income Taxes Net Income 2,000,000 4,300,000 1,075,000 3,225,000 *Includes Lease Expense of $700,000 Required: a) What is the breakeven point for the Famagusta Inn? b) If the fixed cost lease is traded for a variable lease of 10% of total sales, what is the revised breakeven point for the Famagusta Inn?...
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ACCT 2301 Operating Leverage Handout #8 d cot ha Contribution margin income statements for two competing companies are provided below: Anthe Alpha Cempany Revenue Less variable costs Contribution margin Less fixed costs Net income Gamma Company $500,000 200.000 $300,000 270.000 $30,000 $500,000 350,000 $150,000 120.000 $30,000 Required: 1) Show each company's cost structure by inserting the percentage of the company's revenue represented by each item on the contribution income statement: Alpha Company $500,000 200,000 $300,000 Gemma Company $s00.000 350,000 $150,000...
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The following income statement applies to Solomon Company for the current year: Income Statement Sales revenue (420 $15,960 units x $38) Variable cost (420 (9,660) units x $23) Contribution margin 6,300 Fixed cost (4,800) Net income $ 1,500 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Solomon Company will earn if it experiences a 15 percent...
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ine toliowing income statement appiles to Kawai Company ror tne current year Income Statement Sales revenue (200 units x $60) Variable cost (200 units $36) Contribution margin $12,000 (7,200) 4,800 (1,600) Fixed cost Net income $3,200 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Kawai Company will earn if it experiences a 10 percent increase in...
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The following income statement applies to Jordan Company for the current year: Income Statement Sales revenue (420 units X $33) Variable cost (420 units x $18) Contribution margin Fixed cost Net income $13,860 (7,560) 6,300 (4,300) $ 2,000 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Jordan Company will earn if it experiences a 20 percent...
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Income Statement Sales revenue (460 units X $39) Variable cost (460 units x $24) Contribution margin Fixed cost Net income $ 17,940 (11,040) 6,900 (4,900) $ 2,000 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Stuart Company will earn if it experiences a 20 percent increase in revenue. The sales price per unit is not affected....
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ne following income statement applies to Gibson Company for the current year Income Statement Sales revenue (480 units $32) Variable cost (489 units * $17) Contribution margin Fixed cost Net income $15,360 (8,160) 7, 208 (4,200) $ 3, eee Required m. Use the contribution margin approach to calculate the magnitude of operating leverage b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Gibson Company will earn it experiences a 15 percent...
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3. Construct a new contribution format income statement for the
company assuming a 18% increase in sales.
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Percent of Sales 100% 40% 60% Amount $ 132,000 52,800 79,200 20,000 $ 59,200 Sales Variable expenses Contribution margin Fixed expenses Net operating income Required: 1. Compute the company's degree of operating leverage. (Round your answer to 2 decimal places.) Degree of operating leverage 2....
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The following income statement was drawn from the records of
Fanning Company, a merchandising firm:
FANNING COMPANY
Income Statement
For the Year Ended December 31, Year 1
Sales revenue (5,500 units × $164)
$
902,000
Cost of goods sold (5,500 units × $88)
(484,000
)
Gross margin
418,000
Sales commissions (10% of sales)
(90,200
)
Administrative salaries expense
(87,000
)
Advertising expense
(31,000
)
Depreciation expense
(50,000
)
Shipping and handling expenses (5,500 units × $2)
(11,000
)
Net income...
The following income statement applies to Kawai Company for the current year. Income Statement Sales revenue (200 units X $60) Variable cost (200 units * $36) Contribution margin Pixed cost Net income $12,000 (7,200) 4,800 (1.600) $ 3,200 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Kawal Company will earn if it experiences a 10 percent...
1. The Famagusta Inn's income statement is as follows: Revenue Variable Costs Contribution Margin Rooms 5,500,000 1,200,000 4,300,000 Food 3,000,000 1,000,000 2,000,000 Total 8,500,000 2,200,000 6,300,000 Fixed Costs Pretax Income Taxes Net Income 2,000,000 4,300,000 1,075,000 3,225,000 *Includes Lease Expense of $700,000 Required: a) What is the breakeven point for the Famagusta Inn? b) If the fixed cost lease is traded for a variable lease of 10% of total sales, what is the revised breakeven point for the Famagusta Inn?...
ACCT 2301 Operating Leverage Handout #8 d cot ha Contribution margin income statements for two competing companies are provided below: Anthe Alpha Cempany Revenue Less variable costs Contribution margin Less fixed costs Net income Gamma Company $500,000 200.000 $300,000 270.000 $30,000 $500,000 350,000 $150,000 120.000 $30,000 Required: 1) Show each company's cost structure by inserting the percentage of the company's revenue represented by each item on the contribution income statement: Alpha Company $500,000 200,000 $300,000 Gemma Company $s00.000 350,000 $150,000...
The following income statement applies to Solomon Company for the current year: Income Statement Sales revenue (420 $15,960 units x $38) Variable cost (420 (9,660) units x $23) Contribution margin 6,300 Fixed cost (4,800) Net income $ 1,500 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Solomon Company will earn if it experiences a 15 percent...
ine toliowing income statement appiles to Kawai Company ror tne current year Income Statement Sales revenue (200 units x $60) Variable cost (200 units $36) Contribution margin $12,000 (7,200) 4,800 (1,600) Fixed cost Net income $3,200 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Kawai Company will earn if it experiences a 10 percent increase in...
The following income statement applies to Jordan Company for the current year: Income Statement Sales revenue (420 units X $33) Variable cost (420 units x $18) Contribution margin Fixed cost Net income $13,860 (7,560) 6,300 (4,300) $ 2,000 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Jordan Company will earn if it experiences a 20 percent...
Income Statement Sales revenue (460 units X $39) Variable cost (460 units x $24) Contribution margin Fixed cost Net income $ 17,940 (11,040) 6,900 (4,900) $ 2,000 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Stuart Company will earn if it experiences a 20 percent increase in revenue. The sales price per unit is not affected....
ne following income statement applies to Gibson Company for the current year Income Statement Sales revenue (480 units $32) Variable cost (489 units * $17) Contribution margin Fixed cost Net income $15,360 (8,160) 7, 208 (4,200) $ 3, eee Required m. Use the contribution margin approach to calculate the magnitude of operating leverage b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Gibson Company will earn it experiences a 15 percent...
3. Construct a new contribution format income statement for the
company assuming a 18% increase in sales.
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Percent of Sales 100% 40% 60% Amount $ 132,000 52,800 79,200 20,000 $ 59,200 Sales Variable expenses Contribution margin Fixed expenses Net operating income Required: 1. Compute the company's degree of operating leverage. (Round your answer to 2 decimal places.) Degree of operating leverage 2....