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problem: Understanding effects of operating leverage High Tech, Company, & Old-time Co compete with in 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:                                                                                                        
[1] Multiply your answer in requirement G) by the operating income of dollar 210,000 reported in 2008 for each firm.

[2] Compare and contrast 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, & H?

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M922465

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