Hogue Sports Hut provides individual instruction and coaching to children participating in the city's baseball, softball, basketball,
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?
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...
Step by Step Answer:
a Contribution margin 304000 Operating income 121600 D...View the full answer
