Reference no: EM132659685
The following CVP income statements are available for Oldham Company and Newton Company:
Oldham Company Newton Company
Sales revenue $420,000 $420,000
Variable costs 210,000 84,000
Contribution margin 210,000 336,000
Fixed costs 160,000 286,000
Operating income $50,000 $50,000
Problem 1: Calculate the break-even point in dollars and the margin of safety ratio for each company. (Round break-even point to the nearest whole dollar, e.g. 5,275 and margin of safety ratio to 2 decimal places, e.g. 15.25%.)
Problem 2: Calculate the degree of operating leverage for each company.
Problem 3: Assuming that sales revenue increases by 20%, prepare variable cost income statement for each company.
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