Question: Couzen's Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.25 and fixed costs of $531,000 Every dollar of sales

 Couzen's Company's cost structure is dominated by variable costs with a

Couzen's Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.25 and fixed costs of $531,000 Every dollar of sales contributes 25 cents toward ficed costs and profit. The cost structure of a competitor. Jones \& Family, is dominated by foxed costs with a higher contribution margin ratio of 0.75 and fixed costs of $2,743,500. Every dollar of sales contributes 75 cents toward fixed costs and profit Both companies have sales of $4,425,000 annually. Required: a. Compare the two companies' cost structures b. Suppose that both companies experlence o 12 percent decrease in sales volume. By how much would each company's profits decreose? Complete this question by entering your answers in the tabs below. Compare the two companies' cost structures

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!