Question: Che 4 111 points The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.40 and fixed costs of
Che 4 111 points The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.40 and fixed costs of $78,000. Every dollar of sales contributes 40 cents toward fixed costs and profit. The cost structure of a competitor, One-Mart, is dominated by fixed costs with a higher contribution margin ratio of 0.80 and fixed costs of $338,000. Every dollar of sales contributes 80 cents toward fixed costs and profit. Both companies have sales of $650,000 for the month. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 10 percent increase in sales volume. By how much would each company's profits Increase? Book Pri References Complete this question by entering your answers in the tabs below. Required A Required Compare the two companies' cost structures. 650 Sales Variable cost Contribution margin Fred costs Operating profit GREENBACK STORE Amount Percentage $ 100% 390,000 60 $ 260.000 40% 78.000 0 ONE-MART Amount Percentage 650,000 100% 130.000 20 520,000 80%
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