Calculating Break Even with Different Cost Structures
Laurel Company and Hardy Inc. are separate companies that operate in the same industry. Following are variable costing income statements for the two companies showing their different cost structures:
| Laurel Co. | Hardy Inc. |
Sales | $275,000 | $275,000 |
Variable Costs | 185,000 | 125,000 |
Contribution Margin | 90,000 | 150,000 |
Fixed Costs | 35,000 | 95,000 |
Net Income | $ 55,000 | $ 55,000 |
Required:
1.Briefly describe the similarities and differences in these two companies.
2.Calculate the break-even sales dollars for each company.
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