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Current Attempt in Progress The CVP income statements shown below are available for Armstrong Company and...

Current Attempt in Progress The CVP income statements shown below are available for Armstrong Company and Contador Company. Armstrong Co. Contador Co. Sales $490,000 $490,000 Variable costs 247,000 45,000 Contribution margin 243,000 445,000 Fixed costs 143,000 345,000 Net income $100,000 $100,000 (a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e.g. 1.15.) Degree of Operating Leverage Armstrong Contador (b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for each company. Armstrong Company Contador Company

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Armstrong Contador
Sales        490,000        490,000
Variable costs        247,000           45,000
Contribution Margin        243,000        445,000
Fixed costs        143,000        345,000
Net Income        100,000        100,000
a-1 Degree of Operating leverage = Contribution Margin/Net Income 2.43 4.45
b. Variable costing income statement
Armstrong Contador
Sales        539,000        539,000
Variable costs        271,700           49,500
Contribution Margin        267,300        489,500
Fixed costs        143,000        345,000
Net Income        124,300        144,500

ekkarill92 answered 2 years ago
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