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Compute the degree of operating leverage for each company

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Reference no: EM131735881

Question - The CVF' income statements shown below are available For Armstrong Company and Contador Company.

 

Armstrong Co.

Contador Co.

Sales

$491,000

$491,000

Variable costs

243,000

51,000

Contribution margin

248,000

440,000

Fixed costs

155,000

347,000

Net income

$93,000

$93,000

[a] Compute the degree of operating leverage for each company.

[b] Assuming that sales revenue Increases by 10%, prepare a variable costing Income statement for each company.

Reference no: EM131735881

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