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Calculate the contribution margins for the two companies

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

Brake, Inc.

Carbo, Inc.

Sales

$300,000

$300,000

Variable Costs

60,000

180,000

Fixed Costs

210,000

90,000

Operating Income

$30,000

$30,000


Required:

  1. Calculate the contribution margins for the two companies.
  2. Calculate the break-even point for each firm, in dollars and in units.
  3. Compare the two companies. What conclusions could you make regarding the use of operating leverage employed by the two firms?
  4. Assume that both companies experience an increase in sales by 15% next year. What would be the

Reference no: EM131290560

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