nment Question1 The CVP income statements shown below are available for Armstron

Question

nment Question1 The CVP income statements shown below are available for Armstrong Company and Contador Company Armstrong Co. Contador Co. Variable costs Contribution margin Fixed costs Net income $500,000 241,000 259,000 158,000 $101,000 $500,000 53,000 447,000 346,000 $101,000 (a) Compute the degree of operating leverage for each company. (Round answers to 3 decimal places, e.g. 1.150.) 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 vacy Policy I

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Armstrog Co Contador co Sales            500,000.00            500,000.00 Less Variable Expenses            241,000.00              53,000.00 Contribution Margin            259,000.00            447,000.00 Fixed cost            158,000.00            346,000.00 Net income            101,000.00            101,000.00 Degree of operating leverage = Contribution/Net Income                         2.56                         4.43 b) Sales            550,000.00            550,000.00 Less Variable Expenses            265,100.00              58,300.00 Contribution Margin            284,900.00            491,700.00 Fixed cost            158,000.00            346,000.00 Net income            126,900.00            145,700.00 Degree of operating leverage = Contribution/Net Income                         2.25                         3.37

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