All categories

2 years ago

All else being equal, a company with a low operating leverage will have:

Business

1 answer:

nlexa [21]2 years ago

5 0

Answer:

c) relatively high variable costs

Explanation:

Operating leverage is a ratio that is used to analyze and understand the cost structure of a business. It gives the relation between the variable and fixed cost to the the total cost of running the business.

A business with a large amount of fixed cost relative to variable is said to have a high operating leverage . For such business, operating income would be more volatile because the operating income would not increase in commensurate proportion as sales revenue.

And a company with low operating leverage has low amount of fixed cost relative to variable cost and therefore a relatively high variable costs

Operating leverage is calculated as

Contribution /Earnings before interest and Tax

You might be interested in

on January 31,2009,Village Bank had 500000 shares of $2 par value common stock outstanding. On that date the company declared a

slavikrds [6]

A reduction in retained earnings of $2,950,000.

$37(500,000 x .14) = &2,590,000

3 0

2 years ago

The flow of information and ideas from one person to another involving a sender method of transmitting the idea or content and r

Deffense [45]

Answer:

Communication

Explanation:

Communication is the exchange and flow of information and ideas from one person to another; it involves a sender transmitting an idea, information, or feeling to a receiver

5 0

2 years ago

What is compounding interest?

Svetlanka [38]

Answer:

Explanation:

the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.

4 0

2 years ago

Applying Factory Overhead Bergan Company estimates that total factory overhead costs will be $620,000 for the year. Direct labor

gizmo_the_mogwai [7]

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Applying Factory Overhead Bergan Company estimates that total factory overhead costs will be $620,000 for the year. Direct labor hours are estimated to be 80,000.

A) Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 620,000/80,000= $7.75 per direct labor hour

B) Bergan Company accumulated 2,500 hours of direct labor costs on Job 200 and 3,000 hours on Job 305.

Job 200:

Allocated overhead= 2,500*7.75= $19,375

Job 305:

Allocated overhead= 3,000*7.75= $23,250

C) Job 200 19,375

Job 305 23,250

Allocated Overhead 42,625

6 0

2 years ago

Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $1,350 per

Sergio039 [100]

Answer:

(a) $33750000 (b) $11250000 (c) $22500000

Explanation:

Solution

(a) How much would Ziegler Inc. total income of operating increase.

Now,

Units * (Cost of purchased from outside supplier - Variable cost)

Thus,

75000 * ($1350 - $900) = $33750000

(b) How much would the Instrument Division's operating income increase

Now,

The Units * (Cost of purchased from outside supplier - Transfer Price)

So,

75000 units * ($1350 - $1200) = $11250000

Now,

Units * (Transfer Price - Variable cost)

75000 units * ($1200 - $900) = $22500000

3 0

2 years ago