Question - Juras Inc. and Hinson Inc. have the following operating data:
Sales 160,000 215,000
Variable costs 130,000 115,000
Contribution margin 30,000 100,000
Fixed costs 20,000 75,000
Income fromoperations 10,000 25,000
a. Compute the operating leverage for Juras Inc. and Hinson Inc.
b. How much would income from operations increase for each company if the sales of each increased by 10%?
c. Why is there a difference in the increase in income from operations for the two companies? Explain.