Question

Hogue Sports Hut provides individual instruction and coaching to children participating in the city's baseball, softball, basketball, and soccer youth leagues. Last year's results were as follows:
Sales revenue........ $950,000
Variable expenses....... 646,000
Contribution margin....... 304,000
Fixed expenses........ 182,400
Operating income....... $121,600
Required

a. What is Hogue Sports Hut's degree of operating leverage?
b. If Anna Hogue, the company's president, is successful in increasing sales revenue by 5%, by what percent will the company's operating income increase?
c. After achieving the sales increase in part (b), what will be the company's new operating income?
d. After achieving the sales increase in part (b), what will be the company's new operating leverage?



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  • CreatedFebruary 21, 2014
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