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Compute the operating leverage for beck inc and bryant inc

    Assignment Instructions

    Assignment ID: FG133135264

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

    Beck Inc.

    Bryant Inc.

    Sales

    $275,900

    $869,000

    Variable costs

    110,700

    521,400

    Contribution margin

    $165,200

    $347,600

    Fixed costs

    106,200

    189,600

    Income from operations

    $59,000

    $158,000

    Required –

    a. Compute the operating leverage for Beck Inc. and Bryant Inc.

    b. How much would income from operations increase for each company if the sales of each increased by 15%?

    c. The difference in the increases/decreases of income from operations is due to the difference in the operating leverages. Beck Inc.’s higher lower operating leverage means that its fixed costs are a largersmaller percentage of contribution margin than are Bryant Inc.’s.

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