Solution-Compute the degree of operating leverage for each

Compute the degree of operating leverage for each company

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Reference no: EM13889208

The CVP income statements shown below are available for Armstrong Company and Contador Company.

	Armstrong Co.	Contador Co.
Sales	$500,000	$500,000
Variable costs	240,000	50,000
Contribution margin	260,000	450,000
Fixed costs	160,000	350,000
Net income	$100,000	$100,000

Instructions

(a) Compute the degree of operating leverage for each company and interpret your results.

(b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for each company.

Reference no: EM13889208

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Compute the degree of operating leverage for each company

Reference no: EM13889208

Reference no: EM13889208

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