Company A has current sales of $10,717,172 and a 43% contribution margin. Its fixed costs are $2,370,653. Company B is a service firm with current service revenue of $5,488,617 and a 19% contribution margin. Company B’s fixed costs are $597,932. Compute the degree of operating leverage for Company B if there was a 12% increase in revenue. Round to the hundredth, two decimals.

Company A has current sales of $10,717,172 and a 43% contribution margin. Its fixed costs are $2,370,653. Company B is a service firm with current service revenue of $5,488,617 and a 19% contribution margin. Company B’s fixed costs are $597,932. Compute the degree of operating leverage for Company B if there was a 12% increase in revenue. Round to the hundredth, two decimals.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 13EA: Company A has current sales of $10,000,000 and a 45% contribution margin. Its fixed costs are...

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