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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?

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 4BE: Profit margin, investment turnover, and ROI Briggs Company has operating income of 36,000, invested...
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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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