Shown here are condensed income statements for two different companies (both are organized as LLCs and pay no income taxes).
| Miller Company | ||
| Sales | $ | 1,000,000 |
| Variable expenses (80%) |
800,000 |
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| Income before interest | 200,000 | |
| Interest expense (fixed) | 60,000 | |
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| Net income | $ |
140,000 |
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| Weaver Company | ||
| Sales | $ | 1,000,000 |
| Variable expenses (60%) |
600,000 |
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| Income before interest | 400,000 | |
| Interest expense (fixed) | 260,000 | |
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| Net income | $ |
140,000 |
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What happens to each company’s net income if sales increase by 30%?
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