The Greenback Stores cost structure is dominated by variable costs with a contribution margin ratio of 0.40 and fixed costs of $58,400. Every dollar of sales contributes 40 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 $350,400. Every dollar of sales contributes 80 cents toward fixed costs and profit. Both companies have sales of $730,000 for the month.

Required: a. Compare the two companies cost structures.

	Greenback Store	Greenback Store	OneMart	OneMart
	Amount	Percentage	Amount	Percentage
Sales
Variable cost
Contribution Margin
Fixed Costs
Operating Profit

b. Suppose that both companies experience a 20 percent increase in sales volume. By how much would each companys profits increase?

Green Back's Store's Profits Increase by:
One Mart's Profits Increase by: