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Lofft Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (2,000 units): $ 120,000 Variable expenses : 90,000 Contribution margin : 30,000 Fixed expenses: 16,500 Net operating income: $ 13,500 Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 10% increase in sales volume is closest to: (Round your intermediate calculations to 1 decimal place.) a. 88.89% b. 22.22% c. 1.13% d. 4.50%

Lofft Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (2,000 units): $ 120,000 Variable expenses : 90,000 Contribution margin : 30,000 Fixed expenses: 16,500 Net operating income: $ 13,500 Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 10% increase in sales volume is closest to: (Round your intermediate calculations to 1 decimal place.) a. 88.89% b. 22.22% c. 1.13% d. 4.50%

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
Chapter7: Variable Costing For Management analysis
Section: Chapter Questions
Problem 16E
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Lofft Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (2,000 units): $ 120,000 Variable expenses : 90,000 Contribution margin : 30,000 Fixed expenses: 16,500 Net operating income: $ 13,500 Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 10% increase in sales volume is closest to: (Round your intermediate calculations to 1 decimal place.) a. 88.89% b. 22.22% c. 1.13% d. 4.50%
Transcribed Image Text:Lofft Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (2,000 units): $ 120,000 Variable expenses : 90,000 Contribution margin : 30,000 Fixed expenses: 16,500 Net operating income: $ 13,500 Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 10% increase in sales volume is closest to: (Round your intermediate calculations to 1 decimal place.) a. 88.89% b. 22.22% c. 1.13% d. 4.50%
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