Income Statements for Two Different Wineries Are as Follows A $\quad$

question 99

Essay

Income statements for two different wineries are as follows: $\begin{array}{lrr}&\text { White Wine } & \text { Red Wine } \\&\text { Company } & \text { Company }\\\hline\text { Sales } & \$ 400,000 & \$ 400,000 \\\text { Less: Variable costs } & 300,000 & 200,000 \\\text { Contribution margin } & \$ 100,000 & \$ 200,000 \\\text { Less: Fixed costs } & 50,000 & 150,000 \\\text { Onerating income } & \$ 50,000 & \$ 50,000\end{array}$ A. $\quad$ Calculate the degree of operating leverage for each firm.
B. $\quad$ Calculate the margin of safety in doll ars for each firm.
C. $\quad$ Determine the operating income for each firm if sales increase by $20 \%$ .

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Definitions:

Post-Employment Plans

Financial arrangements made by employers to provide employees with benefits after retirement, such as pensions.

Accumulating Non-Vesting

Benefits or rights that accumulate over time in favor of an employee, which are not lost despite not meeting certain vesting criteria.

Long Service Leave

An employee benefit that provides paid leave for employees who have served a particular period of time with the same employer or industry.

Annual Leave

Paid time off work granted by employers to employees to be used for personal activities.