Question: Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $325,700 $1,000,000 Variable costs 130,700 600,000 Contribution margin $195,000 $400,000
Beck Inc. and Bryant Inc. have the following operating data:
| Beck Inc. | Bryant Inc. | |||
| Sales | $325,700 | $1,000,000 | ||
| Variable costs | 130,700 | 600,000 | ||
| Contribution margin | $195,000 | $400,000 | ||
| Fixed costs | 120,000 | 200,000 | ||
| Income from operations | $75,000 | $200,000 | ||
a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.
| Beck Inc. | |
| Bryant Inc. |
b. How much would income from operations increase for each company if the sales of each increased by 10%? If required, round answers to nearest whole number.
| Dollars | Percentage | ||
| Beck Inc. | $ | % | |
| Bryant Inc. | $ | % | |
c. The difference in the of income from operations is due to the difference in the operating leverages. Beck Inc.'s operating leverage means that its fixed costs are a percentage of contribution margin than are Bryant Inc.'s.
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