Question: Spring Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $102.000 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 $102.000 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 070 and fixed costs of $306,000. Every dollar of sales contributes 70 cents toward fixed costs and profit. Both companies have soles of $510.000 per month 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
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