d. Degree of operating leverage e. Suppose the company experiences a 30% increase in revenues, compute for the percentage change in profits.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Statement of Comprehensive Income for Brooklyn Company for the current year is
Sales P750,000
Variable cost 600,000
Contribution margin 150,000
Fixed cost 100,000
Operating income P50,000
Required:
d. Degree of operating leverage
e. Suppose the company experiences a 30% increase in revenues, compute for the
percentage change in profits.
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