CADS Manufacturing company prepared the following contribution margin income statement based on a normal capacity production...

 

Transcribed Image Text:

CADS Manufacturing company prepared the following contribution margin income statement based on a normal capacity production of 160,000 units: Required: Sales Variable costs Contribution Margin Fixed Costs Operating Income $2,560,000 1,180,000 1,380,000 920,000 $460,000 a. Compute the Degree of Operating Leverage. b. If sales are expected to increase by 8%, what would the new operating income be? c. Compute the contribution margin ratio. d. Based on the contribution margin ratio, compute the breakeven sales in dollars. CADS Manufacturing company prepared the following contribution margin income statement based on a normal capacity production of 160,000 units: Required: Sales Variable costs Contribution Margin Fixed Costs Operating Income $2,560,000 1,180,000 1,380,000 920,000 $460,000 a. Compute the Degree of Operating Leverage. b. If sales are expected to increase by 8%, what would the new operating income be? c. Compute the contribution margin ratio. d. Based on the contribution margin ratio, compute the breakeven sales in dollars.