Reference no: EM132566654

Question - The following CVP income statements are available for Oldham Company and Newton Company:

	Oldham Company	Newton Company
Sales revenue	$440,000	$440,000
Variable costs	220,000	88,000
Contribution margin	220,000	352,000
Fixed costs	170,000	302,000
Operating income	$50,000	$50,000

Required -

1. Calculate the break-even point in dollars and the margin of safety ratio for each company.

2. Calculate the degree of operating leverage for each company.

3. Assuming that sales revenue increases by 20%, prepare variable cost income statement for each company.

4. Assuming that sales revenue decreases by 20%, prepare variable cost income statement for each company.