Comparing Contribution Margin Percentages Below are actual statements of operating income for Microsoft and Procter Gamble (in millions):

Comparing Contribution Margin Percentages Below are actual statements of operating income for Microsoft and Procter & Gamble (in millions): Microsoft Procter & Gamble Revenues $39,788 Net sales $68,222 Cost of revenue 6,200 Cost of products sold 33,125 Research and development 6,184 Selling, general, and Sales and Marketing 8,677 administrative expenses 21,848 General and administrative 4,166 Operating income $13,249 Operating income $14,561 Assume that the only variable cost for Microsoft is “cost of revenue” and for Procter & Gamble it is “cost of products sold.” 1. Compute the contribution-margin percentage of Microsoft and that of Procter & Gamble. Why do you suppose the percentages are so different? 2. Suppose each company increases its revenue by $10 million. Compute the increase in operating income for each company. 3. Explain how the contribution margin percentage helps you predict the effects on operating income of changes in sales volume. What assumptions do you make in formi Read more: Comparing Contribution Margin Percentages Below… – JustAnswer http://www.justanswer.com/questions/2czzx-comparing-contribution-margin-percentages-below-are-actual#ixzz13ILXJsYy

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