Learning Objective $1$

subcomponents from outside suppliers. The direct materials costs are higher, but fixed factory overhead is considerably lower. Relevant data for a sales level of $30,000$ units follow:

Required:

Compute the degree of operating leverage for each process. Round your answers to one decimal place. Use the rounded answers in subsequent calculations.

Process $1$

Process $2$

Suppose that sales are $20$ percent higher than budgeted. By what percentage will operating income increase for each process?

Process $1$

$\%$

Process $2$

$\%$

What will be the increase in operating income for each system? Round your answers to the nearest dollar.

Process $1,$ s

Process $2$

What will be the total operating income for each process? Round your intermediate calculations and final answers to the nearest dollar. Use the rounded answers in subsequent calculations.

Process $1$$$

Process $2$

$

What if unit sales are $10$ percent lower than budgeted? By what percentage will operating income decrease for each process?

Process $1$

$\%$

Process $2$

$\%$

What will be the total operating income for each process? Round your intermediate calculations and final answers to the nearest dollar. Use the rounded answers in subsequent calculations.

Process $1$

$$

Process $2$