Sales Asha Inc. and Samir Inc. have the following operating data: Samir Inc. $1,131,000 Asha Inc....

 

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Sales Asha Inc. and Samir Inc. have the following operating data: Samir Inc. $1,131,000 Asha Inc. $369,100 Variable costs (148,100) (678,600) Contribution margin $221,000 $452,400 Fixed costs (156,000) (278,400) Operating income $65,000 $174,000 a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. 3.4 Samir Inc. 2.6 b. How much would operating income increase for each company if the sales of each increased by 15%? If required, round answers to nearest whole number. Asha Inc. $ Dollars 33,150 Samir Inc. c. The difference in the increases means that its fixed costs are a larger Feedback Percentage 51 39 % % of operating income is due to the difference in the operating leverages. Asha Inc.'s higher percentage of contribution margin than are Samir Inc.'s. operating leverage Check My Work a. Divide the contribution margin by the operating income. b. Multiply the operating leverage by the percentage increase or decrease of sales. Multiply that percentage by operating income to determine increase or decrease. c. How does operating leverage affect operating income? Check My Work Previous Next Sales Asha Inc. and Samir Inc. have the following operating data: Samir Inc. $1,131,000 Asha Inc. $369,100 Variable costs (148,100) (678,600) Contribution margin $221,000 $452,400 Fixed costs (156,000) (278,400) Operating income $65,000 $174,000 a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. 3.4 Samir Inc. 2.6 b. How much would operating income increase for each company if the sales of each increased by 15%? If required, round answers to nearest whole number. Asha Inc. $ Dollars 33,150 Samir Inc. c. The difference in the increases means that its fixed costs are a larger Feedback Percentage 51 39 % % of operating income is due to the difference in the operating leverages. Asha Inc.'s higher percentage of contribution margin than are Samir Inc.'s. operating leverage Check My Work a. Divide the contribution margin by the operating income. b. Multiply the operating leverage by the percentage increase or decrease of sales. Multiply that percentage by operating income to determine increase or decrease. c. How does operating leverage affect operating income? Check My Work Previous Next