Question - The CVF' income statements shown below are available For Armstrong Company and Contador Company.
|
|
Armstrong Co.
|
Contador Co.
|
|
Sales
|
$491,000
|
$491,000
|
|
Variable costs
|
243,000
|
51,000
|
|
Contribution margin
|
248,000
|
440,000
|
|
Fixed costs
|
155,000
|
347,000
|
|
Net income
|
$93,000
|
$93,000
|
[a] Compute the degree of operating leverage for each company.
[b] Assuming that sales revenue Increases by 10%, prepare a variable costing Income statement for each company.