The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.32 and fixed costs of $62,000. Every dollar of sales contributes 32 cents toward fixed costs and profit. The cost structure of a competitor, Oakfield Convenience Store, is dominated by fixed costs with a higher contribution margin ratio of 0.68 and fixed costs of $582,800. Every dollar of sales contributes 68 cents toward fixed costs and profit. Both companies have sales of $1,240,000 for the year. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 20 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. Sales Variable cost Contribution margin Fixed costs Operating profit Dennis's Retail Mart's Amount Percentage Oakfield Convenience Store Amount Percentage $ 1,240,000 100% 100% 70% 30% 30% 70% 5% 45% 25 % 25% The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.32 and fixed costs of $62,000. Every dollar of sales contributes 32 cents toward fixed costs and profit. The cost structure of a competitor, Oakfield Convenience Store, is dominated by fixed costs with a higher contribution margin ratio of 0.68 and fixed costs of $582,800. Every dollar of sales contributes 68 cents toward fixed costs and profit. Both companies have sales of $1,240,000 for the year. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 20 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. Sales Variable cost Contribution margin Fixed costs Operating profit Dennis's Retail Mart's Amount Percentage Oakfield Convenience Store Amount Percentage $ 1,240,000 100% 100% 70% 30% 30% 70% 5% 45% 25 % 25%
Expert Answer:
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Posted Date:
Students also viewed these accounting questions
-
Couzens Companys cost structure is dominated by variable costs with a contribution margin ratio of .25 and fixed costs of $450,000. Every dollar of sales contributes 25 cents toward fixed costs and...
-
The Dollar Stores cost structure is dominated by variable costs with a contribution margin ratio of .30 and fixed costs of $30,000. Every dollar of sales contributes 30 cents toward fixed costs and...
-
What is the output after executing the following Java statements? for (int i-2; i <3; i++) for (int j-2; j <4; j++) System.out.print ((i+j) + " ");
-
Langer Company produces plastic items, including plastic housings for humidiers. Each housingrequires about 15 ounces of plastic costing $0.08 per ounce. Langer molds the plastic into the...
-
For each of the following independent cases, indicate the amount of gross income that must be included on the taxpayers 2019 income tax return. a. Malchia won a $4,000 humanitarian award. b. Rob won...
-
Follow the steps below to prove the LLN without using CLT. (a) Let \(X\) be a random variable with mean \(\mu\) and variance \(\sigma^{2}\). Then for any real number \(\alpha>0,...
-
After the success of the company's first two months, Adria Lopez continues to operate Success Systems. (Transactions for the first two months are described in the serial problem of Chapter 2.) The...
-
A crystal was analyzed using X-ray diffraction with radiation from a copper source. The observed angle was 8.61. Determine the distance between layers of the crystal. d = Element (pm) CO 179 Cr 229...
-
make learning more interactive and fun for students, a math teacher decides to teach a concept to students by using Lego blocks. There are 2 rows of legos, rowA ( of length n ) and rows ( of length m...
-
Your boss wants you to provide an evaluation of the following: Proprietorship, partnership, corporation, charter, and bylaws Limited Partnership, limited liability partnership, and professional...
-
In comparison to financial statement audits, auditors who perform integrated audits typically perform ______. Multiple choice question. more substantive procedures than tests of controls more audit...
-
A place to gather information regarding investments that is free to the public and can be accessed during normal business hours is: Multiple choice question. the library. trading floor. options...
-
#1 Classical Liberal Economics (5 points) a. Explain in your own words Adam Smith's Classical Liberal Economics concepts of free trade, free markets, "the invisible hand" at the market place, the...
-
Compute the employer's payroll tax expense based on the following totals found on a completed payroll register dated November 15. bullet Gross pay = $ 41 comma 000.00 bullet Taxable earnings for...
-
You have a portfolio with two assets. Stock A returned 6% and Stock B returned 14%. If you have $500 invested in Stock A and $1500 invested in Stock B. For partial credit, type out the formula with...
-
Find the maximum likelihood estimators (MLE's) based on a random sample X1,.....,Xn from each of the following distributions: a) Xi~BIN(1,p) b) Xi~GEO(p) c) Xi~NB(3,p) d) Xi~N(0,?) e) Xi~GAM(?,2) f)...
-
A simple random sample of 220 university students were asked what pasta they usually order and with which sauce. The preferences of these respondents are summarised below: Sauce Bolognese Pasta...
-
What is dumping? What role would a cost accountant play in determining whether dumping has occurred?
-
Consider Question 7-15. What are some of the allocation bases you considered? Why did you choose the one you used?
-
Variable Cost Variances: Materials Purchased and Materials Used Are Not Equal Golden Company reported the following information concerning its direct materials: Direct materials purchased (actual) ....
-
Are there any activities in a family that you believe should be allocated by a market? What characteristics do those activities have?
-
What is the difference between socialism in theory and socialism in practice?
-
Into what three sectors are market economies generally broken up?
Study smarter with the SolutionInn App