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problem: Understanding effects of operating leverage High Tech, Corporation, and Old Time Company compete within the same industry & had the following operating results in 2008:

 

High Tech

Old Time

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:
Compute the amount of operating incomes [or loss] that you would expect each firm to report in 2009 if sales were to

[A] Increase by 20 percent

[B] Decrease by 20 percent

 

High Tech

Old Time

Sales........................................

 

100%

 

100%

Variable expenses.....................

 

 

 

 

Contribution Margin.........

 

 

 

 

Fixed expenses..................

 

 

 

 

Operating income..................

 

 

 

 

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M923243

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