Solution-Compare the two companies cost structures

Compare the two companies cost structures

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Reference no: EM132964148

Question - The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.20 and fixed costs of $20,000. Every dollar of sales contributes 20 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 0.70 and fixed costs of $220,000. Every dollar of sales contributes 70 cents toward fixed costs and profit. Both companies have sales of $400,000 for the month. Compare the two companies' cost structures?

Reference no: EM132964148

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Compare the two companies cost structures

Reference no: EM132964148

Reference no: EM132964148

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Cost Accounting Questions & Answers

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