Hogue Sports Hut provides individual instruction and coaching to children participating in the city's baseball, softball, basketball, and soccer youth leagues. Last year's results were as follows: Sales revenue $950,000 Variable expenses 646,000 Contribution margin 304,000 Fixed expenses 182,400 Operating income $ 121,600 Required a.What is Hogue Sports Hut's degree of operating leverage? b.If Anna Hogue, the company's president, is successful in increasing sales revenue by 8%, by what percent will the company's operating income increase? c.After achieving the sales increase in part (b), what will be the company's new operating income? d.After achieving the sales increase in part (b), what will be the company's new operating leverage?
Hogue Sports Hut provides individual instruction and coaching to children participating in the city's baseball, softball, basketball, and soccer youth leagues. Last year's results were as follows: Sales revenue $950,000 Variable expenses 646,000 Contribution margin 304,000 Fixed expenses 182,400 Operating income $ 121,600 Required a.What is Hogue Sports Hut's degree of operating leverage? b.If Anna Hogue, the company's president, is successful in increasing sales revenue by 8%, by what percent will the company's operating income increase? c.After achieving the sales increase in part (b), what will be the company's new operating income? d.After achieving the sales increase in part (b), what will be the company's new operating leverage?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Hogue Sports Hut provides individual instruction and coaching to children participating in the city's baseball, softball, basketball, and soccer youth leagues. Last year's results were as follows:
| Sales revenue |
$950,000
|
| Variable expenses |
646,000
|
| Contribution margin |
304,000
|
| Fixed expenses |
182,400
|
| Operating income |
$ 121,600
|
Required
a.What is Hogue Sports Hut's degree of operating leverage?
b.If Anna Hogue, the company's president, is successful in increasing sales revenue by 8%, by what percent will the company's operating income increase?
c.After achieving the sales increase in part (b), what will be the company's new operating income?
d.After achieving the sales increase in part (b), what will be the company's new operating leverage?
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