Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger

تمرين 25

Break-Even Sales, Operating Leverage, Change in Income
Income statements for two different companies in the same industry are as follows:

Required:
1. Compute the degree of operating leverage for each company.
2. CONCEPTUAL CONNECTION Compute the break-even point in dollars for each company. Explain why the break-even point for Macduff is higher.
3. CONCEPTUAL CONNECTION Suppose that both companies experience a 30% increase in revenues. Compute the percentage change in profits for each company. Explain why the percentage increase in Macduff's profits is so much larger than that of Duncan.