Question

Entergo Company installs home theatre systems. The company’s most recent monthly contribution format income statement appears below:
Required:
1. Compute the company’s degree of operating leverage.
2. Using the degree of operating leverage, estimate the impact on operating income of a 10% increase in sales.
3. Verify your estimate from (2) above by constructing a new contribution format income statement for the company, assuming a 10% increase in sales.


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  • CreatedJuly 08, 2015
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