Acquisitions, Inc. is considering the purchase of the following two companies: Company A Company B Sales...

 

Transcribed Image Text:

Acquisitions, Inc. is considering the purchase of the following two companies: Company A Company B Sales $400,000 Sales $400,000 Variable Costs 80,000 Variable Costs 160,000 CM 320,000 CM 240,000 Fixed Costs $160,000 Fixed Costs $80,000 Operating Income $160,000 Operating Income $160,000 Required: a. Compute the Operating Leverage for each company b. Use the Operating Leverage to calculate the Income from Operations for each company if sales increase by 10% Acquisitions, Inc. is considering the purchase of the following two companies: Company A Company B Sales $400,000 Sales $400,000 Variable Costs 80,000 Variable Costs 160,000 CM 320,000 CM 240,000 Fixed Costs $160,000 Fixed Costs $80,000 Operating Income $160,000 Operating Income $160,000 Required: a. Compute the Operating Leverage for each company b. Use the Operating Leverage to calculate the Income from Operations for each company if sales increase by 10%

Answer rating: 100% (QA)

ANSWER To compute the Operating Leverage for each company well use the formula Operating Leverage Co... View the full answer