The Kolby and Kent companies both increased sales by 30% this year when compared with last years
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The Kolby and Kent companies both increased sales by 30% this year when compared with last year’s results. Kolby’s net income increased 40% as a result of the increased sales. Kent’s net income increased 20%. Explain why differences in operating leverage may have resulted in a higher increase in net income for Kolby than for Kent. Provide a diagram to illustrate your explanation.
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Operating leverage can be measured as the percentage of a companys total costs accounted for by fixe...View the full answer
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Financial Accounting Information For Decisions
ISBN: 978-0324672701
6th Edition
Authors: Robert w Ingram, Thomas L Albright
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