Firms Y and Z both produce and sell small gasoline engines. The sales price is $200 per engine. Data for both firms at a sales volume of 50 units are as follows:

 

	Firm Y	Firm Z
Sales (50 units)	$ 10,000	$ 10,000
Variable costs ($50, $25)	2,500	1,250
Total contribution margin	$ 7,500	$ 8,750
Fixed costs	4,500	5,750
Operating income (?B)	$ 3,000	$ 3,000

 

Required:

From the existing level of sales, which firm's operating income (?_B) is more sensitive to changes in sales volume? Show calculations and round your answers to 2 decimal places.

Answer rating: 100% (QA)

To determine which firms operating income is more sensitive to changes in sales volume we need to ca... View the full answer