Question: Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.45 and fixed costs of $255,600. Every dollar of sales contributes
Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.45 and fixed costs of $255,600. Every dollar of sales contributes 45 cents toward fixed costs and profit. The cost of a competitor, Winters Company, is dominated by fixed costs with a higher margin ratio of 0.70 and fixed costs of $433,100. Every dollar of sales contributes 70 cents toward fixed costs and profit. Both companies have sales of $710,000 per month. Suppose that both companies experience a 10 percent increase in sales volume
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