Homework Assignment6

Homework Assignment6 - increase in profits because the...

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Bus 215 Section 8 October 18, 2010 Homework Assignment – Chapter 6 E6-1) The product’s contribution margin ratio is the percentage of sales. This ration is useful in planning business operations because it shows how the contribution margin will be affected by a change in total sales. E6-3) When sales increase, Company B, with mostly fixed costs, will tend to realize the greatest
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Unformatted text preview: increase in profits because the fixed costs will not be affected by the sales volume. With company A, with mostly variable costs, the costs are affected by the sales volume which means, contribution margin will decrease. E6-4) Operating Leverage: A measure of how sensitive net operating income is to a given percentage change in dollar sales....
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This note was uploaded on 01/06/2012 for the course BUSINESS 215 taught by Professor Patriciamcquaid during the Fall '10 term at Cal Poly.

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