Operating leverage Asha Inc. and Samir Inc. have the following operating data: Asha Inc. Samir Inc....
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Operating leverage Asha Inc. and Samir Inc. have the following operating data: Asha Inc. Samir Inc. Sales $244,500 $733,500 Variable costs (98,100) (440,100) Contribution margin $146,400 $293,400 Fixed costs. (85,400) (130,400) Operating Income $61,000 $163,000 a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. 2.4 Samir Inc. 1.8 E I b. How much would operating income increase for each company if the sales of each increased by 10%? If required, round answers to nearest whole number. Asha Inc. Samir Inc. Dollars Percentage % % c. The difference in the increases of operating income is due to the difference in the operating leverages. Asha Inc.'s higher operating leverage means that its fixed costs are a larger percentage of contribution margin than are Samir Inc.'s. Operating leverage Asha Inc. and Samir Inc. have the following operating data: Asha Inc. Samir Inc. Sales $244,500 $733,500 Variable costs (98,100) (440,100) Contribution margin $146,400 $293,400 Fixed costs. (85,400) (130,400) Operating Income $61,000 $163,000 a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. 2.4 Samir Inc. 1.8 E I b. How much would operating income increase for each company if the sales of each increased by 10%? If required, round answers to nearest whole number. Asha Inc. Samir Inc. Dollars Percentage % % c. The difference in the increases of operating income is due to the difference in the operating leverages. Asha Inc.'s higher operating leverage means that its fixed costs are a larger percentage of contribution margin than are Samir Inc.'s.
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