The CVP income statements shown below are available for AX Company and ZY Company at the...
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The CVP income statements shown below are available for AX Company and ZY Company at the beginning of 2020. Sales Variable Costs Contribution Margin Fixed Costs Net Income AX Company ZY Company $500,000 $500,000 $110,000 $10,000 $390,000 $490,000 $100,000 $200,000 $290,000 $290,000 Instructions a. Using the breakeven point in dollar, determine which company could be in risk? b. Determine the degree of operating leverage for each company. c. During 2020, both companies faced problems resulted in having a decline in sales by $50,000 and that affected rapidly to the net income during that year. Which company would produce less net income? The CVP income statements shown below are available for AX Company and ZY Company at the beginning of 2020. Sales Variable Costs Contribution Margin Fixed Costs Net Income AX Company ZY Company $500,000 $500,000 $110,000 $10,000 $390,000 $490,000 $100,000 $200,000 $290,000 $290,000 Instructions a. Using the breakeven point in dollar, determine which company could be in risk? b. Determine the degree of operating leverage for each company. c. During 2020, both companies faced problems resulted in having a decline in sales by $50,000 and that affected rapidly to the net income during that year. Which company would produce less net income?
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a To determine which company could be at risk based on the breakeven point in dollars we need to cal... View the full answer
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Accounting Tools for business decision making
ISBN: 978-0470095461
4th Edition
Authors: kimmel, weygandt, kieso
Posted Date:
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