Exercise $3-37($Algo$)$ Analysis of Cost Structure $($LO $3-2)$

Couzen's Company's cost structure is dominated by varlable costs with a contribution margin ratio of $0\mathrm{.}30$ and fixed costs of $$499,500.$

Every dollar of sales contributes $30$ cents toward fixed costs and profit. The cost structure of a competitor, Jones & Family, is

dominated by fixed costs with a higher contribution margin ratio of $0\mathrm{.}80$ and fixed costs of $$2,580\mathrm{.}750.$ Every dollar of sales contributes

$80$ cents toward fixed costs and profit. Both companies have sales of $$4,162,500$ annually.

Required:

a$.$ Compare the two companles' cost structures.

b$.$ Suppose that both companles experlence a $12$ percent decrease in sales volume. By how much would each company's profits

decrease?

Complete this question by entering your answers in the tabs below.

Compare the two companies' cost structures.

Exercise $3-37($Algo$)$ Analysis of Cost Structure $($LO $3-2)$

Couzen's Company's cost structure is dominated by varlable costs with a contribution margin ratio of $0\mathrm{.}30$ and fixed costs of $$499,500.$

Every dollar of sales contributes $30$ cents toward fixed costs and profit. The cost structure of a competitor, Jones & Family, is

dominated by fixed costs with a higher contribution margin ratio of $0\mathrm{.}80$ and fixed costs of $$2,580\mathrm{.}750.$ Every dollar of sales contributes

$80$ cents toward fixed costs and profit. Both companies have sales of $$4,162,500$ ahnually.

Required:

Q$.$ Compare the two companies' cost structures.

b$.$ Suppose that both companies experlence a $12$ percent decrease in sales volume. By how much would each company's profits

decrease?

Complete this question by entering your answers in the tabs below.

Suppose that both companies experience a $12$ percent decrease in sales volume. By how much would each company's profits

decrease?