Question: $5,000,000 The Pluto Company contribution format income statement from last year is shown below: Sales (100,000 units) Variable expenses Required: Fixed expenses Operating Income

$5,000,000 The Pluto Company contribution format income statement from last year is

$5,000,000 The Pluto Company contribution format income statement from last year is shown below: Sales (100,000 units) Variable expenses Required: Fixed expenses Operating Income 3,500,000 1,500,000 1,000,000 $500,000 1. Compute the degree of operating leverage. (2 marks) 2. If Pluto Company can sell 15,000 more units, compute the following a. The expected percentage increase in operating income for next year (Do not prepare an income statement use the degree of operating leverage to compute your answer). (3 marks) b. The expected operating income for next year (Do not prepare an income statement use the degree of operating leverage to compute your answer) (2 marks)

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