The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio...
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The Greenback Store's cost structure is dominated by variable costs with a contribution margin ratio of 0.45 and fixed costs of $107,200. Every dollar of sales contributes 45 cents toward fixed costs and profit. The cost structure of a competitor, One- Mart, is dominated by fixed costs with a higher contribution margin ratio of 0.70 and fixed costs of $274,700. Every dollar of sales contributes 70 cents toward fixed costs and profit. Both companies have sales of $670,000 for the month. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 20 percent increase in sales volume. By how much would each company's profits increase? Required A Required B Compare the two companies' cost structures. GREENBACK STORE Amount Percentage ONE-MART Amount Percentage Sales % Variable cost Contribution margin Fixed costs Operating profit Required A Required B Suppose that both companies experience a 20 percent incre increase? Greenback Store's profits increase by One-Mart's profits increase by
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