1. The following CVP income statements are available for ABC Company and XYZCompany.SalesVariable costsContribution marginFixed costsOperating incomeABC CompanyCVP I/S for 2020$500,000300,000200,000180,000$ 20,000XYZ CompanyCVP I/S for 2020$500,000180,000320,000300,000$ 20,000med m(a) Compute the break-even point in dollars and the margin of safety ratio for eachw ww w w ww h m w m ww mcompany.(b) Compute the degree of operating leverage for each company.(c) Assuming that sales revenue decreases by 20%,eacha CVP income statement forw w w w ww wwww w w m wmcompany.(d) Assuming that sales revenue increases by 20%, calculate the operating incomes of thetwo companies withoutw w w www med mwww S WInoul preparing income statement. (Use DOL)nea ww w

1. The following CVP income statements are available for ABC Company and XYZ w ompany. АВС Сompany Sales Variable costs Contribution margin Fixed costs Operating income CVP I/S for 2020 $500,000 300,000 200,000 180,000 $ 20,000 XYZ Company CVP I/S for 2020 $500,000 180,000 320,000 300,000 $ 20,000 (a) Compute the break-even point in dollars and the margin of safety ratio for each wm w m 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. w w ww www. mdn w m m m m

1. The following CVP income statements are available for ABC Company and XYZ w ompany. АВС Сompany Sales Variable costs Contribution margin Fixed costs Operating income CVP I/S for 2020 $500,000 300,000 200,000 180,000 $ 20,000 XYZ Company CVP I/S for 2020 $500,000 180,000 320,000 300,000 $ 20,000 (a) Compute the break-even point in dollars and the margin of safety ratio for each wm w m 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. w w ww www. mdn w m m m m

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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