Sales Variable expenses $ 98,000 100% 39, 200 40% Contribution margin 58,800 60% 45,080 Fixed expenses...

 

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Sales Variable expenses $ 98,000 100% 39, 200 40% Contribution margin 58,800 60% 45,080 Fixed expenses Net operating income $ 13,720 Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 7% increase in unit sales. 3. Construct a new contribution format incom statement for the company assuming a 7% increase in unit sales. Sales Variable expenses $ 98,000 100% 39, 200 40% Contribution margin 58,800 60% 45,080 Fixed expenses Net operating income $ 13,720 Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 7% increase in unit sales. 3. Construct a new contribution format incom statement for the company assuming a 7% increase in unit sales.

Answer rating: 100% (QA)

To calculate the degree of operating leverage DOL we use the formula DOL Con... View the full answer