Singh Co. reports a contribution margin of $960,000 and fixed costs of $720,000. (1) Compute the companys

Question:

Singh Co. reports a contribution margin of $960,000 and fixed costs of $720,000.

(1) Compute the company’s degree of operating leverage.

(2) If sales increase by 15%, what amount of income will Singh Co. report?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...