Income Statements for Two Different Wineries Are as Follows A Calculate the Degree of Operating Leverage for Each Firm

question 27

Essay

Income statements for two different wineries are as follows: $\begin{array}{lcc}&\text { White Wine }&\text { Red Wine }\\&\text { Company }&\text { Company }\\\text { Sales } & \$ 400,000 & \$ 400,000 \\\text { Less: Variable costs } & 300,000 & 200,000 \\\text { Contribution margin } & \$ 100,000 & \$ 200,000 \\\text { Less: Fixed costs } & \$ 0,000 & \$ 150,000 \\\text { Operating income } & \$ 50,000 & \$ 50,000\end{array}$ A. Calculate the degree of operating leverage for each firm.
B. Calculate the margin of safety in dollars for each firm.
C. Determine the operating income for each firm if sales increase by 20%.

Recognize the proper grammatical structure in passive voice sentences.

Understand the correct form of nouns in singular and plural contexts.

Identify appropriate noun usage within a sports context.

Recognize proper noun forms in environmental and legal contexts.

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Definitions:

Not Affecting Cash

Transactions or events that do not result in actual cash flow in or out of a company but may still impact the financial statements.

Payments to Suppliers

Amounts of money paid by a company to its suppliers for goods or services received.

Payments to Employees

Refers to all forms of compensation, both monetary and in-kind, given to employees for their services.

Payments of Interest

The act of paying the interest charge on a loan or debt, typically made at regular intervals over the lifetime of the loan.