Question: Spring Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $100.800 Every dollar of sales
Spring Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $100.800 Every dollar of sales contributes 30 cents toward fixed costs and profit. The cost structure of a competitor, Winters Company, is dominated by fixed costs with a higher contribution margin ratio of 0.70 and foxed costs of $292,800. Every dollar of sales contributes 70 cents toward fixed costs and profit. Both companies have sales of $480,000 per month Required: a. Compare the two companies' cost structures b. Suppose that both companies experience a 10 percent increase in sales volume. By how much would each company's profits increase? Complete this question by entering your answers in the tabs below. Required A Required B Compare the two companies' cost structures SPRING COMPANY - Amount Percentage WINTERS COMPANY Amount Percentage Sales Variable cost Contribution margin Fixed costs Operating profit Required
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