Aurora Systems Inc. prepared the following contribution format income statement based on a sales volume of 2,000 units (the relevant range of production is 1,000 units to 3,000 units): Category Amount ($) Sales $40,000 Variable Expenses $24,000 Contribution Margin $16,000 Fixed Expenses $10,000 Net Operating Income $6,000 What is the degree of operating leverage?
Aurora Systems Inc. prepared the following contribution format income statement based on a sales volume of 2,000 units (the relevant range of production is 1,000 units to 3,000 units): Category Amount ($) Sales $40,000 Variable Expenses $24,000 Contribution Margin $16,000 Fixed Expenses $10,000 Net Operating Income $6,000 What is the degree of operating leverage?
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management
analysis
Section: Chapter Questions
Problem 16E
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Financial Accounting
Transcribed Image Text:Aurora Systems Inc. prepared the following contribution format income
statement based on a sales volume of 2,000 units (the relevant range of
production is 1,000 units to 3,000 units):
Category
Amount ($)
Sales
$40,000
Variable Expenses
$24,000
Contribution Margin
$16,000
Fixed Expenses
$10,000
Net Operating Income $6,000
What is the degree of operating leverage?
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