Question: RETE The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $55,200. Every dollar

 RETE The Greenback Store's cost structure is dominated by variable costs
with a contribution margin ratio of 0.30 and fixed costs of $55,200.

RETE The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $55,200. Every dollar of sales contributes 30 cents toward fixed costs and profit. The cost structure of a competitor, One-Mart, is dominated by fixed costs with a higher contribution margin ratio of 0.80 and fixed costs of $285,200. Every dollar of sales contributes 80 cents toward fixed costs and profit. Both companies have sales of $460,000 for the month. SE Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 15 percent increase in sales volume. By how much would each company's profits increase? Incre Answer is not complete Answer is Complete this question by entering your answers in the tabs below. Required A Required Compare the two companies' cost structures. ONE MART Amount Percentage 480.000 100 % 0 2.00020 S GREENBACK STORE Amount Percentage 15460000 100 % 3 22.000 700 13,800 30 % 5 5. 200 46 Sales Variable cost Contribution Feed costs Operating profit 2 200 % The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $55,200. Every dollar of sales contributes 30 cents toward foed costs and profit. The cost structure of a competitor, One-Mart, is dominated by foxed costs with a higher contribution margin ratio of 0.80 and fixed costs of $285,200. Every dollar of sales contribut 80 cents toward fixed costs and profit. Both companies have sales of $460,000 for the month points Required: a. Compare the two companies' cost structures b. Suppose that both companies experience a 15 percent increase in sales volume. By how much would each company's profits Increase? Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Suppose that both companies experience a 15 percent increase in sales volume. By how much would each company's profits increase? Greenback Store's profits increase by One-Man's profi sse by

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!