Question: Foxx Companys cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $95,400. Every dollar of sales

Foxx Companys cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $95,400. Every dollar of sales contributes 30 cents toward fixed costs and profit. The cost structure of a competitor, Beyonce, Inc., is dominated by fixed costs with a higher contribution margin ratio of 0.80 and fixed costs of $307,400. Every dollar of sales contributes 80 cents toward fixed costs and profit. Both companies have sales of $530,000 per month.

(a)

Compare the two companies cost structures using the format shown below.
Foxx Company Beyonce, Inc.
Amount Percentage (%) Amount Percentage (%)
Sales
Variable Cost
Contribution Margin
Fixed Costs
Operating Profit

(b) Suppose that both companies experience a 10 percent increase in sales volume. By how much would each companys profits increase?

Foxx Company's profits increase by

Beyonce Inc's profits increase by

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