The CVP income statements shown below are available for Billings Company and Boz
ID: 2385761 • Letter: T
Question
The CVP income statements shown below are available for Billings Company and Bozeman Company.
Billings Co.
Bozeman Co.
Sales revenue
$600,000
$600,000
Variable costs
280,000
80,000
Contribution margin
320,000
520,000
Fixed costs
170,000
370,000
Net income
$150,000
$150,000
Compute the degree of operating leverage for each company. (Round answer to 3 decimal places, e.g. 1.150.)
$
$
The CVP income statements shown below are available for Billings Company and Bozeman Company.
Billings Co.
Bozeman Co.
Sales revenue
$600,000
$600,000
Variable costs
280,000
80,000
Contribution margin
320,000
520,000
Fixed costs
170,000
370,000
Net income
$150,000
$150,000
Compute the degree of operating leverage for each company. (Round answer to 3 decimal places, e.g. 1.150.)
Billings Co. BozemanExplanation / Answer
DOL for Billings Co. = 2.133 DOL for Bozeman = 3.467 Billings Co. Sales 660,000 Variable Costs 308,000 Contribution Margin 352,000 Fixed Costs 170,000 Net Income 182,000 Bozeman Co. Sales 660,000 Variable Costs 88,000 Contribution Margin 572,000 Fixed Costs 370,000 Net Income 202,000