Operating Leverage Beck Inc. and Bryant Inc. have the following operating data:

Question

Operating Leverage

Beck Inc. and Bryant Inc. have the following operating data:

a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.

b. How much would income from operations increase for each company if the sales of each increased by 15%? If required, round answers to nearest whole number.

Beck Inc. Bryant Inc. Sales $114,200 $303,000 Variable costs 45,800 181,800 Contribution margin $68,400 $121,200 Fixed costs 30,400 20,200 Income from operations $38,000 $101,000

Explanation / Answer

a Beck Inc. 1.8 =68400/38000 Bryant Inc. 1.2 =121200/101000 b Dollars Percentage Beck Inc. 10260 27% Bryant Inc. 18180 18%

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