Operating Leverage Beck Inc and Bryant Inc have the followin

Operating Leverage

Beck Inc. and Bryant Inc. have the following operating data:

a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.

b. How much would income from operations increase for each company if the sales of each increased by 15%? If required, round answers to nearest whole number.

	Beck Inc.	Bryant Inc.
Sales	$114,200		$303,000
Variable costs	45,800		181,800
Contribution margin	$68,400		$121,200
Fixed costs	30,400		20,200
Income from operations	$38,000		$101,000

Solution

a Beck Inc. 1.8 =68400/38000 Bryant Inc. 1.2 =121200/101000 b Dollars Percentage Beck Inc. 10260 27% Bryant Inc. 18180 18%