The effects of operating leverage

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Reference no: EM1314493

To Find the Income Statement Analysis from the given data.

Understanding the effects of operating leverage High Tech, Inc., and Old-time Co compete within the same industry and had the following operating results in 2008:

	High Tech	Old-time Co.
Sales	$2,100,000	$2,100,000
Variable expenses	420,000	1,260,000
Contribution Margin	$1,680,000	$840,000
Fixed expenses	1,470,000	630,000
Operating income	$210,000	$210,000

Required:
A) Multiply your answer in requirement G) by the operating income of $210,000 reported in 2008 for each firm.

B) Compare your answer in requirement H with your answer in requirement D. What conclusions can you draw about the effects of operating leverage from the steps you performed in requirements F, G, and H?

Reference no: EM1314493

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