2. TLK Ltd. manufactures small size fans to be used in load shedding areas. Each fan has a rechargeable battery and a built in charging circuit. TLK sells a fan for $120. The annual sale is 30,000 fans. Variable and fixed cost data is given below: Variable expenses Fixed expenses Required: A. Prepare contribution margin income statement and compute the degree of operating leverage. B. Next year the sales are expected to increase by 7,500 fans. Compute (a) the expected percentage increase in net operating income (b) expected increase in net operating income and (c) expected total net operating income for the next year. $84 per fan $900,000 per year
2. TLK Ltd. manufactures small size fans to be used in load shedding areas. Each fan has a rechargeable battery and a built in charging circuit. TLK sells a fan for $120. The annual sale is 30,000 fans. Variable and fixed cost data is given below: Variable expenses Fixed expenses Required: A. Prepare contribution margin income statement and compute the degree of operating leverage. B. Next year the sales are expected to increase by 7,500 fans. Compute (a) the expected percentage increase in net operating income (b) expected increase in net operating income and (c) expected total net operating income for the next year. $84 per fan $900,000 per year
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:2. TLK Ltd. manufactures small size fans to be used in load
shedding areas. Each fan has a rechargeable battery and a
built in charging circuit. TLK sells a fan for $120. The
annual sale is 30,000 fans. Variable and fixed cost data is
given below:
Variable expenses
Fixed expenses
Required:
A. Prepare contribution margin income statement and
compute the degree of operating leverage.
B. Next year the sales are expected to increase by 7,500 fans.
Compute (a) the expected percentage increase in net
operating income (b) expected increase in net operating
income and (c) expected total net operating income for the
next year.
$84 per fan
$900,000 per year
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