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Calculate the contribution margin and breakeven point

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Reference no: EM132573618

Question - Assume that two companies, Brake, Inc. and Carbo, Inc., have the following operating results:

Brake, Inc. Carbo, Inc.

Sales $300,000 Brake, Inc $300,000 Carbo, Inc

Variable Costs 60,000 Brake Inc 180,000 Carbo Inc

Fixed Costs 210,000 Brake Inc 90,000 Carbo Inc

Operating Income $30,000B Brake Inc $30,000 Carbo, Inc

Required -

1. Calculate the contribution margin and breakeven point for both companies.

2. Compare the two companies. What conclusions could you make regarding the use of operating leverage employed by the two firms?

3. What recommendations would you make to the two companies and why?

Reference no: EM132573618

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