interpret Company A and Company B's results below in terms of the factors that impact Cost...

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interpret Company A and Company B's results below in terms of the factors that impact Cost Volume Profit Analysis (CVP). Why does Company B have the greater degree of operating leverage? As a manager, why is operating leverage an important concept? Company A Sales (10,000 units times $26) Less Variable expenses (10,000 units $16) Contribution margin (a) Less Fixed expenses Net operating income (b) Degree of operating leverage (a divided by b) $260,000 160,000 100,000 80,000 20,000 5.0 Company B Sales (10,000 units times $32) Less Variable expenses (10,000 units times $20) Contribution margin (a) Less Fixed expenses Net operating income (b) Degree of operating leverage (a divided by b) $320,000 200,000 120,000 100,000 20,000 6.0 interpret Company A and Company B's results below in terms of the factors that impact Cost Volume Profit Analysis (CVP). Why does Company B have the greater degree of operating leverage? As a manager, why is operating leverage an important concept? Company A Sales (10,000 units times $26) Less Variable expenses (10,000 units $16) Contribution margin (a) Less Fixed expenses Net operating income (b) Degree of operating leverage (a divided by b) $260,000 160,000 100,000 80,000 20,000 5.0 Company B Sales (10,000 units times $32) Less Variable expenses (10,000 units times $20) Contribution margin (a) Less Fixed expenses Net operating income (b) Degree of operating leverage (a divided by b) $320,000 200,000 120,000 100,000 20,000 6.0

Answer rating: 100% (QA)

The image shows the results of Company A and Company B with figures related to Cost Volume Profit CVP analysis which is a financial analysis tool that firms use to determine the changes in their cost ... View the full answer