Question

VW POES Current Attempt in Progress The CVP Income statements shown below are available for Armstrong company and Contador Company Sales Variable costs Contribution margin Fond costs Net Income Armstrong Co. Contador Co. $499.000 $499.000 242000 46.000 257.000 453,000 157.000 3501000 $100.000 $100.000 rong (1) Compute the degree of operating leverage for each company. Round a Surces 1150 Camous Degree of Operating Leverage Armstrong valuation Contador Assuming that als een by 10% prepare a variable costing income statement for each company AT SA Type there to search

Answer 1

sales variable cost contribution margin fixed cost net income income statement Armstrong co 499000 242000 257000 157000 100000 condator co 499000 46000 453000 353000 100000 degree of operating leverage 2.57 4.53 Armstrong co condator co Variable costing income statement if sales revenue increased by 10% Armstrong co sales 548900 variable cost 266200 contribution margin 282700 fixed cost 157000 net income 125700 condator co 548900 50600 498300 353000 145300

working notes degree of operating leverage = contribution margin/ net income if slaes increased by 10% and also variable costs increased by 10%.