1. eBook

   Print Item

   Question Content Area

   Operating Leverage

   Beck Inc. and Bryant Inc. have the following operating data:

   	Beck Inc.		Bryant Inc.
   Sales	$384,800		$1,248,000
   Variable costs	154,400		748,800
   Contribution margin	$230,400		$499,200
   Fixed costs	158,400		307,200
   Income from operations	$72,000		$192,000

   a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.

   Beck Inc.	fill in the blank 1
   Bryant Inc.	fill in the blank 2

   b. How much would income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number.

   	Dollars	Percentage
   Beck Inc.	$fill in the blank 3	fill in the blank 4	%
   Bryant Inc.	$fill in the blank 5	fill in the blank 6	%

   c. The difference in the

   increasesdecreases

   of income from operations is due to the difference in the operating leverages. Beck Inc.'s

   higherlower

   operating leverage means that its fixed costs are a

   largersmaller

   percentage of contribution margin than are Bryant Inc.'s.