Cain Company and Abel Corporation have the following income statements for the current year: Cain Company...
Cain Company and Abel Corporation have the following income
statements for the current year:
| Cain Company | Abel Corporation | |
| Sales | $50,000 | $50,000 |
| Variable expenses | 10,000 | 25,000 |
| Contribution margin | $40,000 | $25,000 |
| Fixed expenses | 25,000 | 10,000 |
| Operating income | $15,000 | $15,000 |
What is the degree of operating leverage for Cain Company for the
current year?
a.2.667
b.1.667
c.0.375
d.1.250
Homework Answers
Answer: a.2.667
Explanation:
Degree of operating Leverage = contribution margin / Operating income
= $40,000 / $15,000
= 2.667
Add Answer to:
Cain Company and Abel Corporation have the following income
statements for the current year:
Cain Company...
The CVP income statements shown below are available for Armstrong Company and Contador Company. Contador Co....
The CVP income statements shown below are available for Armstrong Company and Contador Company. Contador Co. Sales Variable costs Contribution margin Fixed costs Net income Armstrong Co. $500,000 240,000 260,000 160,000 $100,000 $500,000 50,000 450,000 350,000 $100,000 Degree of operating leverage for each company is as follows: Degree of Operating Leverage 2.6 4.5 Armstrong Contador Assuming that sales revenue increases by 10%, the variable costing income statement for each company is as follows: Sales Revenue Variable Costs Contribution Margin Fixed...
QUESTION 27 When sales dollars increase, the net income of a company with a high degree...
QUESTION 27 When sales dollars increase, the net income of a company with a high degree of operating leverage will increase more quickly than in a company with a lower operating leverage. However, when sales dollars decrease, the net income of a company with a high degree of operating leverage will decrease more quickly than in a company with a lower operating leverage. True O False QUESTION 28 Jen & Berry's currently sells 100,000 pints of ice cream per month...
Based on the income statements shown below, which division has the cost structure with the highest...
Based on the income statements shown below, which division has the cost structure with the highest operating leverage? Bottled Revenue Variable costs Contribution margin Fixed costs Soft Drinks $ 50,000 (10,000) 40,000 (30,000) $ 10,000 Water $50,000 (5,000) 45,000 (40,000) $ 5,000 Fruit Juices $ 50,000 (30,000) 20,000 (10,000) $ 10,000 Net income Multiple Choice Ο Bottled Water. Ο Soft Drinks. Ο The three divisions have identical operating leverage. Ο Fruit Juices.
The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir...
The following CVP income statements are available for Blanc
Company and Noir Company.
Blanc Company
Noir Company
Sales
$500,000
$500,000
Variable costs
280,000
180,000
Contribution margin
220,000
320,000
Fixed costs
170,000
270,000
Net income
$50,000
$50,000
Contribution Margin Ratio
Blanc Company
0.44
Noir Company
0.64
Break-even Point
Blanc Company
$386,364
Noir Company
$421,875
Margin of Safety Ratio
Blanc Company
0.227
Noir Company
0.156
Degree of Operating Leverage
Blanc Company
4.4
Noir Company
6.4
CVP income statement assuming that sales revenue...
The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir...
The following CVP income statements are available for Blanc
Company and Noir Company.
Blanc Company
Noir Company
Sales
$470,000
$470,000
Variable costs
282,000
235,000
Contribution margin
188,000
235,000
Fixed costs
169,200
216,200
Net income
$18,800
$18,800
Calculate Contribution margin ratio. (Round answers to
2 decimal places, e.g. 0.32.)
Contribution Margin Ratio
Blanc Company
Noir Company
Compute the break-even point in dollars for each company.
(Round answers to 0 decimal places, e.g.
5,125.)
Break-even Point
Blanc Company
$
Noir Company
$...
The income statement for Elite Manufacturing Company for the current year is as follows: Sales (15,000...
The income statement for Elite Manufacturing Company for the current year is as follows: Sales (15,000 units) $180,000 Variable expenses 100,000 Contribution margin $ 80,000 Fixed expenses 60,000 Operating income $ 20,000 What is the contribution margin per unit? (Note: Round answer to two decimal places.) a.$7.20 b.$1.20 c.$5.33 d.$6.56
Toxemia Salsa Corporation manufactures five flavors of salsa. Last year, Toxemia generated net operating income of...
Toxemia Salsa Corporation manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The following information was taken from last year's income statement segmented by flavor (brackets indicate a negative amount): Contribution margin Segment margin Allocated common fixed expenses Segment margin less allocated common fixed expenses Wimpy $ (2,000) $(16,000) $ 10,000 Mild $ 45,000 $ (5,000) $10,000 Medium $35,000 $7,000 $10,000 Hot $50,000 $10,000 $10,000 Atomie $162,000 $ 94,000 $10,000 $(26,000) $(15,000) $ (3,000) $...
Current Attempt in Progress The CVP Income statements shown below are available for Waterway Company and...
Current Attempt in Progress The CVP Income statements shown below are available for Waterway Company and Crane Company Sales Variable costs Contribution margin Fixed costs Net income Waterway Co. Crane Co. $505,000 $505,000 247.000 49.000 258,000 456,000 158,000 356,000 $100,000 $100,000 (a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, eg. 1.15) Degree of Operating Leverage Waterway Crane (b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for...
A Corporation has provided its contribution format income statement for August Sales $863,300 Variable expenses 424,200...
A Corporation has provided its contribution format income statement for August Sales $863,300 Variable expenses 424,200 Contribution margin 436,100 Fixed expenses 352,400 net operating income $83,700 a. Compute the degree of operating leverage to two decimal places. b. Using the degree of operating leverage, estimate the percentage in net operating income that should result from a 14% increase in sales.
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000...
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 40,000 Variable expenses 26,000 Contribution margin 14,000 Fixed expenses 8,680 Net operating income $ 5,320 1 Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales? (Round your intermediate calculations and final answer to 2 decimal places.) 2....
The CVP income statements shown below are available for Armstrong Company and Contador Company. Contador Co. Sales Variable costs Contribution margin Fixed costs Net income Armstrong Co. $500,000 240,000 260,000 160,000 $100,000 $500,000 50,000 450,000 350,000 $100,000 Degree of operating leverage for each company is as follows: Degree of Operating Leverage 2.6 4.5 Armstrong Contador Assuming that sales revenue increases by 10%, the variable costing income statement for each company is as follows: Sales Revenue Variable Costs Contribution Margin Fixed...
QUESTION 27 When sales dollars increase, the net income of a company with a high degree of operating leverage will increase more quickly than in a company with a lower operating leverage. However, when sales dollars decrease, the net income of a company with a high degree of operating leverage will decrease more quickly than in a company with a lower operating leverage. True O False QUESTION 28 Jen & Berry's currently sells 100,000 pints of ice cream per month...
Based on the income statements shown below, which division has the cost structure with the highest operating leverage? Bottled Revenue Variable costs Contribution margin Fixed costs Soft Drinks $ 50,000 (10,000) 40,000 (30,000) $ 10,000 Water $50,000 (5,000) 45,000 (40,000) $ 5,000 Fruit Juices $ 50,000 (30,000) 20,000 (10,000) $ 10,000 Net income Multiple Choice Ο Bottled Water. Ο Soft Drinks. Ο The three divisions have identical operating leverage. Ο Fruit Juices.
The following CVP income statements are available for Blanc
Company and Noir Company.
Blanc Company
Noir Company
Sales
$500,000
$500,000
Variable costs
280,000
180,000
Contribution margin
220,000
320,000
Fixed costs
170,000
270,000
Net income
$50,000
$50,000
Contribution Margin Ratio
Blanc Company
0.44
Noir Company
0.64
Break-even Point
Blanc Company
$386,364
Noir Company
$421,875
Margin of Safety Ratio
Blanc Company
0.227
Noir Company
0.156
Degree of Operating Leverage
Blanc Company
4.4
Noir Company
6.4
CVP income statement assuming that sales revenue...
The following CVP income statements are available for Blanc
Company and Noir Company.
Blanc Company
Noir Company
Sales
$470,000
$470,000
Variable costs
282,000
235,000
Contribution margin
188,000
235,000
Fixed costs
169,200
216,200
Net income
$18,800
$18,800
Calculate Contribution margin ratio. (Round answers to
2 decimal places, e.g. 0.32.)
Contribution Margin Ratio
Blanc Company
Noir Company
Compute the break-even point in dollars for each company.
(Round answers to 0 decimal places, e.g.
5,125.)
Break-even Point
Blanc Company
$
Noir Company
$...
Toxemia Salsa Corporation manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The following information was taken from last year's income statement segmented by flavor (brackets indicate a negative amount): Contribution margin Segment margin Allocated common fixed expenses Segment margin less allocated common fixed expenses Wimpy $ (2,000) $(16,000) $ 10,000 Mild $ 45,000 $ (5,000) $10,000 Medium $35,000 $7,000 $10,000 Hot $50,000 $10,000 $10,000 Atomie $162,000 $ 94,000 $10,000 $(26,000) $(15,000) $ (3,000) $...
Current Attempt in Progress The CVP Income statements shown below are available for Waterway Company and Crane Company Sales Variable costs Contribution margin Fixed costs Net income Waterway Co. Crane Co. $505,000 $505,000 247.000 49.000 258,000 456,000 158,000 356,000 $100,000 $100,000 (a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, eg. 1.15) Degree of Operating Leverage Waterway Crane (b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for...
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