Accounting. The operating levaragyis. Morse Company reports a total contributionmargin of $48,000 and pretax net income of$12,000 for the current month. The degree ofoperating leverage is:a) 4.0b) 0.25c) 1.25d) 2.5e) 250%

Step 1:- Define Degree of Operating LeverageThe degree of operating leverage calculates the effect…

Answered: Morse Company reports a total…

Principles of Accounting Volume 2

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Chapter3: Cost-volume-profit Analysis

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Problem 23MC: If a firm has a contribution margin of $78M90 and a net income of $13,700 for the current month,...

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Jellico Inc.’s projected operating income (based on sales of 450,000 units) for the coming year isas follows:TotalSales $11,700,000Total variable cost 8,190,000Contribution margin $ 3,510,000Total fixed cost 2,254,200Operating income $ 1,255,800Required:1. Compute: (a) variable cost per unit, (b) contribution margin per unit, (c) contribution margin ratio, (d) break-even point in units, and (e) break-even point in sales dollars.2. How many units must be sold to earn operating income of $296,400?3. Compute the additional operating income that Jellico would earn if sales were $50,000 morethan expected.4. For the projected level of sales, compute the margin of safety in units, and then in salesdollars.5. Compute the degree of operating leverage. (Note: Round answer to two decimal places.)6. Compute the new operating income if sales are 10% higher than expected.
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Morse Company reports a total contribution margin of $48,000 and pretax net income of $12,000 for the current month. The degree of operating leverage is: a) 4.0 b) 0.25 c) 1.25 d) 2.5 e) 250%