Shown here are condensed income statements for two, Ask an Expert

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Shown here are condensed income statements for two different companies (both are organized as LLCs and pay no income taxes).

Ace Company
Sales $500,000
Variable expenses (80%) 400,000
Income before interest 100,000
Interest expense (fixed) 30,000
Net income $70,000

Deuce Company
Sales $500,000
Variable expenses (60%) 300,000
Income before interest 200,000
Interest expense (fixed) 130,000
Net income $ 70,000

What happens to each company's net income if sales increase by 50%?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9984573

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