Alabama Corporation and California Corporation have the same sales and profits as follows:

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Alabama Corporation and California Corporation have the same sales and profits as follows: 

 

                Alabama                      California

 

Sales                             $1,000,000                   $1,000,000

Variable Costs                   600,000                       400,000

Contribution Margin            400,000                       600,000

Fixed Costs                      200,000                        400,000

Profit                                200,000                        200,000

 

Using an operating leverage analysis, determine how much profits would increase for each company if each experienced a 10% increase in sales.

 

    • 13 years ago
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