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

Solutions

Expert Solution

	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 1 year ago

Next > < Previous

Related Solutions

Current Attempt in Progress The condensed financial statements of Oriole Company for the years 2016 and...

Current Attempt in Progress The condensed financial statements of Oriole Company for the years 2016 and 2017 are presented as follows. (Amounts in thousands.) ORIOLE COMPANY Balance Sheets December 31 2017 2016 Current assets Cash and cash equivalents $330 $360 Accounts receivable (net) 640 570 Inventory 540 470 Prepaid expenses 120 160 Total current assets 1,630 1,560 Investments 180 180 Property, plant, and equipment (net) 420 380 Intangibles and other assets 530 510 Total assets $2,760 $2,630 Current liabilities $1,070...

Current Attempt in Progress The comparative statements of Sandhill Co. are presented here. SANDHILL CO. Income...

Current Attempt in Progress The comparative statements of Sandhill Co. are presented here. SANDHILL CO. Income Statements For the Years Ended December 31 2017 2016 Net sales $1,896,740 $1,756,700 Cost of goods sold 1,064,740 1,012,200 Gross profit 832,000 744,500 Selling and administrative expenses 506,200 485,200 Income from operations 325,800 259,300 Other expenses and losses Interest expense 23,200 21,200 Income before income taxes 302,600 238,100 Income tax expense 93,200 74,200 Net income $ 209,400 $ 163,900 SANDHILL CO. Balance Sheets December...

Current Attempt in Progress Shown below are comparative balance sheets for Buffalo Industries. Buffalo Industries Comparative...

Current Attempt in Progress Shown below are comparative balance sheets for Buffalo Industries. Buffalo Industries Comparative Balance Sheets December 31 Assets 2022 2021 Cash $ 183,600 $ 59,400 Accounts receivable 237,600 205,200 Inventory 450,900 510,300 Land 216,000 270,000 Equipment 702,000 540,000 Accumulated depreciation—equipment (178,200 ) (86,400 ) Total $1,611,900 $1,498,500 Liabilities and Stockholders’ Equity Accounts payable $ 105,300 $ 116,100 Bonds payable 405,000 540,000 Common stock ($1 par) 583,200 469,800 Retained earnings 518,400 372,600 Total $1,611,900 $1,498,500 Additional information: 1....

The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir...

The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir Company Sales $455,000 $455,000 Variable costs 273,000 227,500 Contribution margin 182,000 227,500 Fixed costs 159,250 204,750 Net income $22,750 $22,750 Compute margin of safety ratio for each company. (Round answers to 3 decimal places, e.g. 0.321.) Margin of Safety Ratio Blanc Company Enter a number Noir Company Enter a number Compute the degree of operating leverage for each company. (Round answers to 2 decimal...

The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir...

The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir Company Sales $457,000 $457,000 Variable costs 265,060 155,380 Contribution margin 191,940 301,620 Fixed costs 171,000 280,680 Net income $20,940 $20,940 Calculate Contribution margin ratio. (Round answers to 2 decimal places, e.g. 0.32.) Contribution Margin Ratio Blanc Company Noir Company Compute break-even point in dollars for each company. (Round answers to 0 decimal places, e.g. 1,225.) Break-even Point Blanc Company $ Noir Company $ Compute...

The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir...

The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir Company Sales $570,000 $570,000 Variable costs 342,000 285,000 Contribution margin 228,000 285,000 Fixed costs 218,880 275,880 Net income $9,120 $9,120 1. Compute margin of safety ratio for each company. (Round answers to 3 decimal places, e.g. 0.321.) Margin of safety ratio Blanc Company: Noir Company: 2. Assuming that sales revenue increases by 20%, prepare a CVP income statement for each company. (Enter negative amounts...

The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir...

The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir Company Sales $545,000 $545,000 Variable costs 327,000 272,500 Contribution margin 218,000 272,500 Fixed costs 207,100 261,600 Net income $10,900 $10,900 a.) Compute the break-even point in dollars for each company. (Round answers to 0 decimal places, e.g. 5,125.) b.) Compute the margin of safety ratio for each company. (Round answers to 0 decimal places, e.g. 5,125.) c.) Compute the degree of operating leverage for...

Question 2 --/1 The following CVP income statements are available for Blanc Company and Noir Company....

Question 2 --/1 The following CVP income statements are available for Blanc Company and Noir Company. Blanc Company Noir Company Sales $ 530,000 $ 530,000 Variable costs 318,000 265,000 Contribution margin 212,000 265,000 Fixed costs 203,520 256,520 Net income $ 8,480 $ 8,480 Calculate Contribution margin ratio. (Round answers to 2 decimal places, e.g. 0.32.) Contribution Margin Ratio Blanc Company Noir Company eTextbook and Media Compute the break-even point in dollars for each company. (Round answers to 0 decimal places,...

Current Attempt in Progress Presented below are a number of balance sheet items for Sarasota, Inc....

Current Attempt in Progress Presented below are a number of balance sheet items for Sarasota, Inc. for the current year, 2020. Goodwill $ 126,300 Accumulated Depreciation-Equipment $ 292,150 Payroll Taxes Payable 178,891 Inventory 241,100 Bonds payable 301,300 Rent payable (short-term) 46,300 Discount on bonds payable 15,150 Income taxes payable 99,662 Cash 361,300 Rent payable (long-term) 481,300 Land 481,300 Common stock, $1 par value 201,300 Notes receivable 447,000 Preferred stock, $10 par value 151,300 Notes payable (to banks) 266,300 Prepaid expenses...

Current Attempt in Progress Presented below is the adjusted trial balance of Splish Corporation at December...

Current Attempt in Progress Presented below is the adjusted trial balance of Splish Corporation at December 31, 2020. Debit Credit Cash $ ? Supplies 1,340 Prepaid Insurance 1,140 Equipment 48,140 Accumulated Depreciation-Equipment $ 4,140 Trademarks 1,090 Accounts Payable 10,140 Salaries and Wages Payable 640 Unearned Service Revenue 2,140 Bonds Payable (due 2027) 9,140 Common Stock 10,140 Retained Earnings 25,140 Service Revenue 10,140 Salaries and Wages Expense 9,140 Insurance Expense 1,540 Rent Expense 1,340 Interest Expense 1,040 Total $ ? $ ? Additional information: 1....

Subjects