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Greenfield Enterprises had the following operating results last year: Category Sales Amount ($) 1,200,000 Variable expenses 600,000 Contribution margin 600,000 Fixed expenses 200,000 Net operating income 400,000 a) Compute the degree of operating leverage at the current level of sales. b) If sales are expected to increase by 15% next year, by how much should net operating income increase?

Greenfield Enterprises had the following operating results last year: Category Sales Amount ($) 1,200,000 Variable expenses 600,000 Contribution margin 600,000 Fixed expenses 200,000 Net operating income 400,000 a) Compute the degree of operating leverage at the current level of sales. b) If sales are expected to increase by 15% next year, by how much should net operating income increase?

FINANCIAL ACCOUNTING
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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Greenfield Enterprises had the following operating results last year: Category Sales Amount ($) 1,200,000 Variable expenses 600,000 Contribution margin 600,000 Fixed expenses 200,000 Net operating income 400,000 a) Compute the degree of operating leverage at the current level of sales. b) If sales are expected to increase by 15% next year, by how much should net operating income increase?
Transcribed Image Text:Greenfield Enterprises had the following operating results last year: Category Sales Amount ($) 1,200,000 Variable expenses 600,000 Contribution margin 600,000 Fixed expenses 200,000 Net operating income 400,000 a) Compute the degree of operating leverage at the current level of sales. b) If sales are expected to increase by 15% next year, by how much should net operating income increase?
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