Question: The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of S50,000. Every dollar of

 The Greenback Store's cost structure is dominated by variable costs with

The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.30 and fixed costs of S50,000. 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 S300,000. Every dollar of sales contributes 80 cents toward fixed costs and profit. Both companies have sales of $500,000 for the month Required: a. Compare the two companies' cost structures GREENBACK STORE ONE-MART Percentage Amount Percentage Sales Variable cost Contribution margin Fixed costs Operating profit S 500,000 100 % S 500,000 100 % 50,000 300,000 b. Suppose that both companies experience a 20 percent increase in sales volume. By how much would each company's profits increase? Greenback Store's profits increase by One-Mart's profits increase by

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