The following sales and cost data (in thousands) are for two companies in the transportation industry:...

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The following sales and cost data (in thousands) are for two companies in the transportation industry: Company A Percent of A

Reg 1A Reg 1B Reg 2 If sales increase from the present level, which company benefits more? O Company A O Company B < Req 1A R

Reg 1A Reg 1B Reg 2 Assume that sales rise 10% in the next year but that everything else remains constant. Calculate the perc Exercise 9-35 CVP Analysis [LO 9-2, 9-3, 9-5] Lawn Master Company, a manufacturer of riding lawn mowers, has a projected inco

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Answer 1

Answer #1

Question-1

1a
	Company A	Company B
Contribution margin	80000	128000
Divide by Operating Profit	52000	75000
Degree of operating leverage	1.538	1.707

1b
Company B

1c
	Company A	Company B
Increase in profit	15.38%	17.07%
	=10%*1.538	=10%*1.707

Question-2
Sales	33000000
Less: Variable costs	26400000
Contribution margin	6600000

Contribution margin	6600000
Divide by Sales	33000000
Contribution margin ratio	20%

1
Fixed expenses	3300000
Divide by Contribution margin ratio	20%
Breakeven point in sales dollars	16500000

2
Fixed expenses	3300000
Add: Before-tax profit	3900000
Required Contribution margin	7200000
Divide by Contribution margin ratio	20%
Required sales in dollars	36000000

3
Sales	33000000
Less: Variable costs	29568000	=26400000*1.12
Contribution margin	3432000

Contribution margin	3432000
Divide by Sales	33000000
Contribution margin ratio	10.40%

Fixed expenses	3300000
Divide by Contribution margin ratio	10.40%
Breakeven point in sales dollars	31730769

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Answer 2

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