bluow CROS EXERCISE 9: LEVERAGE CALCULATIONS Use the following information to calculate the company's operating leverage, finan- cial leverage, and combined leverage: Sales volume Price per unit Variable costs (per unit) Fixed costs Interest Corporate income tax rate 100,000 units $11.30 moll $ 8.30 $100,000 $ 25,000 40% 3200
Q: Blackwelder Factory produces two similar products: small table lamps and desk lamps. The total…
A: Plant wide factory overhead rate = Total factory overhead costs / Total estimated direct labor hours…
Q: Suppose that your bank pays 6% interest, compounded quarterly. Use Table 12-2 to find how much…
A: Using Table 12-2, we can find the present value factor for an annuity of $1 per period for 12…
Q: On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was…
A: Depreciation Expense: Depreciation Expense is a expense charged to assets of the company. It is…
Q: Explain your answer with amounts. Days Sales Inventory Days Sales Receivables Analysis Company A…
A: Inventory is very important in the business because in business you have to satisfy immediate demand…
Q: How much was credit purchases for the month of July 2022?
A: Given in the question: Trade Payable at July 31, 2022 = 56,000 Trade Payable at July 1, 2022 =…
Q: Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional library.…
A: The business entities employed journal entries to record their financial transactions in their…
Q: The Sweetwater Candy Company would like to buy a new machine that would automatically dip…
A: Solution: Net Annual cash inflows = Annual savings in operating costs + Contribution margin from…
Q: Grocery Corporation received $301,001 for 13.50 percent bonds issued on January 1, 2021, at a market…
A: Introduction If stated interest rate on bonds is higher than the market rate of interest then such…
Q: Woodland Wearables produces two models of a smart watch, the Basic and the Flash. The watches have…
A: The contribution margin is calculated as difference between sales and variable costs. The net income…
Q: There are some excellent free personal finance apps available: Mint.com, GoodBudget, Mvelopes,…
A: The notes can be long term or short-term. The notes are the debt instrument. The notes are accepted…
Q: An item of plant and equipment cost £15,000 at the start of Year 3. Its estimated residual value is…
A: Depreciation: It implies to a reduction in the value of fixed asset being used by the business in…
Q: THE FOLLOWING INFORMATION RELATES TO Q 16 to Q 18 On 1 January 2020, the following information is…
A: The loss on impairment is calculated as the difference between the carrying amount of the asset and…
Q: Gage Co. purchases land and constructs a service station and car wash for a total of P540,000. At…
A: leasing can be a useful tool for businesses that need to acquire used assets but want to avoid the…
Q: The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts…
A: The stockholders' equity section shows the owners' claim on the assets, it includes common shares,…
Q: Heidelberg Fabrication manufactures two products, G-09 and G-35: Units produced Direct materials…
A: The overhead is applied to the production on the basis of a pre-determined overhead rate. The…
Q: 1- Jackson Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2021, with…
A: On December 16, 2021, the spot rate is $0.00082, so 20 million Korean won is equivalent to:…
Q: On June 5, Sheffield Company discounted at Sunshine Bank a $7,080 (maturity value), 120-day note…
A: The note receivable is current asset if it would be converted into cash within one year. If company…
Q: Regular Company produces audio equipment, specifically headphones and speakers. A new CEO has just…
A: Profit Margin: The difference between the entire revenue that your company pulls in and the total…
Q: Which of the following are correct tax-free exchanges? Life insurance for life insurance Life…
A: An exchange of property that meets the requirements of Section 1035 of the Internal Revenue Code…
Q: Problem: Module 6 Textbook Problem 10 Learning Objective: 6-5 Make appropriate asset replacement…
A: The replacement cost of the equipment is the total net cash outflow if the equipment is replaced. If…
Q: Before month-end adjustments are made, the February 28 trial balance of Bramble's Enterprise…
A: Income Statement :— It is one of the financial statement that shows profitability, total revenue and…
Q: Required information Eckert Company uses the absorption costing approach to cost plus pricing to set…
A: Answer:- Formula:- Markup percentage on absorption cost = {(Required rate of return x Investment)…
Q: What is the breakeven point, in dollars, for Zippy Dippy Swimwear, maker of bathing suits and…
A: Break even is the point at which the entity is in a position of no profit and no loss. At this…
Q: Jack and Jill exchange like-kind real estate assets as listed below: Jack's old asset: FMV…
A: Given that Jill's old asset: FMV $70,000; and his Basis $55,000 Hence Jill had an deffered gain of…
Q: he statement of financial position as of December 31, 2024, for Blossom Corporation follows: all…
A: Ratio analysis measures whether the company is able to meet its long-term obligations or not.it is…
Q: Now, let’s assume the company wants to consider producing both products. Assume that, considering…
A: This is the follow-up question in which all the questions has been solved except the sub-part number…
Q: During an accounting period, a business sells goods on credit for a total selling price of £3,000.…
A: To calculate the cash inflow from sales, we need to determine the amount of cash received from…
Q: St. Vincent’s, Inc., currently uses traditional costing procedures, applying $993,600 of overhead to…
A: Introduction:- Under the traditional costing method allocation of expenses based on the volume of…
Q: COMPUTE FOR YOUR BASIC EARNING PER SHARE * BASIC EARNINGS PER SHARE Entity A had 50, 000, P15 PAR,…
A: Answer:- Formula:- BEPS = (Net income - Preferred dividends) / Weighted average of common shares…
Q: The following data were provided by Mystery Incorporated for the year ended December 31: Cost of…
A: Gross profit is the amount of sales revenue over and above cost of goods sold. Gross Profit = Net…
Q: Problem 2-6 (IAA) January: Virgo Company provided the following data for the month of Balance per…
A: Note: We’ll answer the first question since Problem 2-6 (IAA) is highlighted so I solved this…
Q: On January 1, 20x0, Ralph was awarded 15,000 ISOs at an exercise price of $3 per share when the fair…
A: As it is observed that both the fair value and exercise price are same W2 income will be Nill…
Q: 3 ces ! Required information [The following information applies to the questions displayed below.]…
A: Current asset is an cash and cash equivalent and other assets which can be realized in normal…
Q: Which of the following is an example of a contra account? expaantion for correct and incorrect a)…
A: A contra account is an account that is used to offset or reduce the balance of another related…
Q: for the years 2020 and 2021. Prepare a comparative Balance sheet and comment on the financial…
A: The comparative balance sheet and analysis is given below
Q: hristmas break to earn a short vacation during the first week of January 201 Sne arns three vacation…
A: INFORMATION:- This question involves accounting for vacation time and compensation for an employee…
Q: Now that she is selling mixers and her customers can use credit cards to pay for them, Natalie is…
A: Amortization is the fall in the value of intangible assets, the amortization expense on intangible…
Q: Josy comes to you because she is getting remarried. She owns the house where she will live with John…
A: In sole ownership with life estate option is an option in which property owner transfer his / her…
Q: Regular Company produces audio equipment, specifically headphones and speakers. A new CEO has just…
A: Profit Margin: The difference between the entire revenue and the total operating expenses of your…
Q: e selling in the market at 99, and the warrants had a market price of $35. oportional method to…
A: Answer : Account title Dr. Cr. Cash ($1,800,000*1.03) $1,854,000 Discount on bonds payable…
Q: investments is $ 8550, how much was invested in each vehicle?
A: Given in the question: Total Amount = $165,000 Interest Rates CDs = 5% = 0.05 Bonds = 2.5% = 0.025…
Q: Q4) below are the actual statements of operating income for Microsoft & Proctor Gamble (In $$…
A: Variable costs are those costs which changes along with change in activity level. Contribution…
Q: Kaumajet Factory produces two products: table lamps and desk lamps. It has two separate departments:…
A: The overhead is applied to the production on the basis of predetermined overhead rate. The…
Q: correct answer please do not give solution in image format
A: Production budget It helps us to calculate the number of units of product that should be…
Q: W. Glass & Company reported the following information in its recent annual report: Year 1 Year 2…
A: Average Inventory = Beginning inventory + Ending inventory2 For Year 1 =…
Q: When you undertook the preparation of the financial statements for Crane Company at January 31,…
A: Computation of ending inventory cost as on 31st Jan 2026 using retail method Cost Retail…
Q: A mechanical engineer purchased a minivan for $47,000. Complete the following table to determin the…
A: TCO stands for Total Cost of Ownership is the cost of the asset throughout its life cycle. This cost…
Q: Royal Company manufactures 24,000 units of Part R-3 each year. At this level of activity, the cost…
A: Based on the details the answer is given below
Q: Please provide the Units of Activity Method
A: Units of Activity Method:To record depreciation expense using the units of activity method, we need…
Q: Cablesource sells two type of cable Cat5 and Cat6. Cat 5 price is $135 per box and Cat6 is $156 per…
A: Formulas: Contribution margin per unit = Selling price per unit - Variable cost per unit Break-even…
Step by step
Solved in 2 steps
- From the following information, calculate Operating Leverage, Financial Leverageand Combined Leverage :Particulars Amount (Rs.)Sales 9,00,000EBIT 2,40,000EBT 1,25,000Tax Rate 35%Variable Cost 60% of salesU.S. Steal has the following income statement data: UnitsSold TotalVariableCosts FixedCosts TotalCosts TotalRevenue OperatingIncome(Loss) 100,000 $ 300,000 $ 90,000 $ 390,000 $ 600,000 $ 210,000 120,000 360,000 90,000 450,000 720,000 270,000 The top row of the table has the beginning values and the bottom row of the table has the ending values. a. Compute the degree of operating leverage (DOL) based on the formula below. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Calculate Degree of Operating levarege? b. Recompute DOL using the formula given below. There may be a slight difference due to rounding. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Calculate Degree of Operating levarege?Degree of Operating Leverage The following sales and cost data (in thousands) are for twocompanies in the transportation industry:Company A Company BAmount Percent of Sales Amount Percent of SalesSales $100,000 100% $100,000 100%Variable costs 50,000 50 30,000 30Contribution margin $ 50,000 50% $ 70,000 70%Fixed costs 15,000 40,000Operating profit $ 35,000 $ 30,000Required1. Calculate the degree of operating leverage (DOL) for each company. If sales increase from the presentlevel, which company benefits more? How do you know?2. Assume that sales rise 10% in the next year but that everything else remains constant. Calculate thepercentage increase in profit for each company. Are the results what you expected? Explain.3. In what sense is DOL a measure of risk?
- Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $238,500 $728,000 Variable costs 95,700 436,800 Contribution margin $142,800 $291,200 Fixed costs 100,800 179,200 Income from operations $42,000 $112,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Beck Inc. ______________ Bryant Inc. ______________ 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. Dollars Percentage Beck Inc. $____________ ______________ % Bryant Inc. $___________ ______________ %Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $267,200 $871,000 Variable costs (107,200) (522,600) Contribution margin $160,000 $348,400 Fixed costs (110,000) (214,400) Operating income $50,000 $134,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Beck Inc. Bryant Inc. b. How much would operating income increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. $ % Bryant Inc. $ % c. The difference in the of operating income is due to the difference in the operating leverages. Beck Inc.'s operating leverage means that its fixed costs are a percentage of contribution margin than are Bryant Inc.'s.Operating Leverage Income statements for two different companies in the same industry are as follows: Trimax, Inc. Quintex, Inc. $400,000 $562,500 200,000 112,500 $200,000 $450,000 150,000 400,000 $50,000 $50,000 Sales Less: Variable costs Contribution margin Less: Fixed costs Operating income Required: 1. Compute the degree of operating leverage for each company. Trimax Quintex 2. Compute the break-even point in dollars for each company. Trimax, Inc. Quintex, Inc. Why is the break-even point for Quintex, Inc., higher? 3. Suppose that both companies experience a 40 percent increase in revenues. Compute the percentage change in profits for each company, Trimax Quintex
- The following income statement applies to Finch Company for the current year: Income Statement Sales revenue (480 units × $30) $ 14,400 Variable cost (480 units × $15) (7,200 ) Contribution margin 7,200 Fixed cost (4,000 ) Net income $ 3,200 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that FinchU.S. Steal has the following income statement data: Units Sold Total Variable Costs Fixed Costs Total Costs Total Revenue Operating Income (Loss) 80,000 $ 160,000 $ 70,000 $ 230,000 $ 400,000 $ 170,000 100,000 200,000 70,000 270,000 500,000 230,000 The top row of the table has the beginning values and the bottom row of the table has the ending values. Compute the degree of operating leverage (DOL) based on the formula below. Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. DOL = Percent change in operating income / Percent change in units sold Recompute DOL using the formula given below. There may be a slight difference due to rounding. Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. DOL = Q(P − VC) / Q(P − VC) − FC Q represents beginning units sold (all calculations should be done at this level). P can be found by dividing total revenue by units sold. VC can be found by dividing total…Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $224,100 $570,500 Variable costs 89,900 342,300 Contribution margin $134,200 $228,200 Fixed costs 73,200 65,200 Income from operations $61,000 $163,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Beck Inc. fill in the blank 1 Bryant Inc. fill in the blank 2 b. How much would income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. $fill in the blank 3 fill in the blank 4 % Bryant Inc. $fill in the blank 5 fill in the blank 6 % c. The difference in the of income from operations is due to the difference in the operating leverages. Beck Inc.'s operating leverage means that its fixed costs are a percentage of contribution margin than are Bryant Inc.'s.
- Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $229,100 $589,500 Variable costs (91,900) (353,700) Contribution margin $137,200 $235,800 Fixed costs (88,200) (104,800) Operating income $49,000 $131,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Beck Inc. Bryant Inc. b. How much would operating income increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. $ % Bryant Inc. $ %Given the following financial data for Cosmos, compute the firm's degree of combined leverage. 2010 2011 Sales $780,000 $874,000 Fixed costs 195,000 218,500 Variable costs 460,200 524,400 EBIT 124,800 131,100 Interest 46,800 52,400 EPS $0.42 $0.51Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $341,300 $1,072,500 Variable costs 136,900 643,500 Contribution margin $204,400 $429,000 Fixed costs 131,400 234,000 Income from operations $73,000 $195,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Beck Inc. fill in the blank 1 Bryant Inc. fill in the blank 2 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. Dollars Percentage Beck Inc. $fill in the blank fill in the blank % Bryant Inc. $fill in the blank fill in the blank % c. The difference in the fill in the blank of income from operations is due to the difference in the operating leverages. Beck Inc.'s fill in the blank operating leverage means that its fixed costs are a fill in the blank…