The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of $55,200. Every dollar of sales contributes 30 cents toward fixed costs and profit. The cost structure of a competitor, One-Mart, is dominated by fixed costs with a higher contribution margin ratio of 0.80 and fixed costs of $285,200. Every dollar of sales contributes 80 cents toward fixed costs and profit. Both companies have sales of $460,000 for the 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?

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 % %

Greenback Store's profits increase by

One-Mart's profits increase by