Chapter $7-$Operating Leverage

FlexFit is analyzing how changes in sales volume impact operating income for its two core products: resistance bands and adjustable dumbbells. Use the information provided along with previously calculated contribution margins per unit and fixed costs to complete the following analysis.

Notes: Use Excel formulas so your calculations are traceable and editable.

Data table:

Item

Units

Expected sales

Resistance Band $2910$ units

Dumbbell $1870$ units

$*$Use Chapter $7$ P$1$ output for CM$/$unit and fixed costs

Required Calculations:

Total Contribution Margin $*$

$15$

$16$

Total Operating Income $($CM $-$ FC$)*$

Degree of Operating Leverage. Round to two decimals.

$17$

$18$

$\%$ Increase in Income if sales increase by $8\%.$ Format to a percentage and round to one decimal.

$19$

$($format your answer as a percentage and round to one decimal place.$)$