1. The following CVP income statements are available for ABC Company and XYZ Company. АВС Соmpany XYZ Company CVP I/S for 2020 CVP I/S for 2020 Sales $500,000 300,000 200,000 180,000 $ 20,000 $500,000 Variable costs 180,000 320,000 300,000 $ 20,000 Contribution margin Fixed costs Operating income (a) Compute the break-even point in dollars and the margin of safety ratio for each company. (b) Compute the degree of operating leverage for each company. (c) Assuming that sales revenue decreases by 20%, prepare a CVP income statement for each company.

1. The following CVP income statements are available for ABC Company and XYZ Company. АВС Соmpany XYZ Company CVP I/S for 2020 CVP I/S for 2020 Sales $500,000 300,000 200,000 180,000 $ 20,000 $500,000 Variable costs 180,000 320,000 300,000 $ 20,000 Contribution margin Fixed costs Operating income (a) Compute the break-even point in dollars and the margin of safety ratio for each company. (b) Compute the degree of operating leverage for each company. (c) Assuming that sales revenue decreases by 20%, prepare a CVP income statement for each company.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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