Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows:Percent ofAmountSalesSales$ 134,00053,600100%Variable expenses40%Contribution margin80, 40060%kFixed expenses15,000Net operating income$65,400ntRequired:1. What is the company's degree of operating leverage?2. Using the degree of operating leveráge, estimate the impact on net operating income of a 12% increase in sales.3. Construct a new contribution format income statement for the company assuming a 12% increase in sales.encesComplete this question by entering your answers in the tabs below.Required 1Reqijired 2Required 3Using the degree of operating leverage, estimate the impact on net operating income of a 12% increase in sales. (Do notround intermediate calculations. Round your percentage answer to 2 decimal places (i.e 0.1234 should be entered as 12.34).)Net operating incomeby%

1. Degree of operating leverage = Contribution margin Net operating income = $80,400$65,400=1.23…

Answered: Engberg Company installs lawn sod in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1) Ehrlich Enterprises prepared the following contribution format income statement based on a sales volume of 3,000 units (the relevant range of production is 1,000 units to 5,000 units): Contribution Margin Income Statement Sales $ 48,000 Variable expenses 30,000 Contribution margin 18,000 Fixed expenses 10,000 Net operating Income $ 8,000 If sales decline to 1,300 units, what would be the net operating income (loss)? If the selling price increases by $3 per unit and the sales volume decreases by 100 units, what would be the net operating income? What is the break-even point in unit sales? What is the break-even point in dollar sales?
The following annual information is for Dexter Corporation: Product A Revenue per unit: $20.00 Variable cost per unit: $15.00 Total fixed costs: $100,000 How many units does the company have to sell to achieve an after tax income of $75,000 if the income tax rate is 25%?
The records of Valium Company show a contribution margin ratio of 45%. The company desires to earn a profit of $36,000 and has fixed costs of $60,750. Determine the sales revenue that would have to be generated in .order to earn the desired profit 215,000 ) $340,000 $300,000 $240,000 $106,250
Subject : - Accounting
Whirly Corporation’s most recent income statement is shown below: Total Per Unit Sales (8,800 units) $ 281,600 $ 32.00 Variable expenses 167,200 19.00 Contribution margin 114,400 $ 13.00 Fixed expenses 54,900 Net operating income $ 59,500 Required: Prepare a new contribution format income statement under each of the following conditions (consider each case independently): 1. The sales volume increases by 80 units. 2. The sales volume decreases by 80 units. 3. The sales volume is 7,800 units.
Salt Corporation's contribution margin ratio is 75% and its fixed monthly expenses are $55,000. Assume that the company's sales for May are expected to be $114,000. Required: Estimate the company's net operating income for May, assuming that the fixed monthly expenses do not change. Net operating income
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Whirlpool Corporation's most recent income statement is shown below: Total Per Unit Sales (10,000 units) 350,000 35.00 Variable Expenses 200,000 20.00 Contribution Margin 150,000 15.00 Fixed Expenses 135,000 Net Operating 15,000 Income Given the following independent situations, what would be the net operating income of Whirlpool Corporation if: 1. Sales Volume increases by 100 units. 2. Sales Volume decreases by 100 units. 3. Sales Volume is 9,000 units.
Operating Leverage Cartersville Co. reports the following data: Sales $485,800 Variable costs 291,500 Contribution margin $194,300 Fixed costs 156,200 Income from operations $38,100 Determine Cartersville Company's operating leverage. Round your answer to one decimal place.
Operating Leverage Cartersville Co. reports the following data: Sales $455,200 Variable costs (250,400) Contribution margin $204,800 Fixed costs (146,300) Operating income $58,500 Determine Cartersville Co.’s operating leverage. Round your answer to one decimal place.
Question 2: Harry Company manufactures and sells steel chairs. The company’s contribution format income statement for the most recent year is given below: Sales (9,000 units) $162,000 Variable expense 90,000 Contribution margin 72,000 Fixed expense 40,000 Net operating profit 32,000 Requirement Calculate the variable ratio Compute the company’s degree of operating leverage at the present level of How many units must be sold to achieve a target profit of $8,000 and interpret your What is the revised net operating income if variable expense decreased by $2 per unit and the number of units sold increased by 20%?
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