Northstar Company prepared the following contribution format income statement based on a sales volume of 1,200 units (the relevant range of production is 800 units to 1,800 units): Sales: $36,000 Variable expenses: $18,000 Contribution margin: $18,000 Fixed expenses: $10,800 Net operating income: $7,200 Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $10,800 and the total fixed expenses are $18,000. Given this scenario, and assuming that total sales remain the same, calculate the degree of operating leverage. Using the calculated degree of operating leverage, what is the estimated percentage increase in net operating income of a 5% increase in sales?

Northstar Company prepared the following contribution format income statement based on a sales volume of 1,200 units (the relevant range of production is 800 units to 1,800 units): Sales: $36,000 Variable expenses: $18,000 Contribution margin: $18,000 Fixed expenses: $10,800 Net operating income: $7,200 Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $10,800 and the total fixed expenses are $18,000. Given this scenario, and assuming that total sales remain the same, calculate the degree of operating leverage. Using the calculated degree of operating leverage, what is the estimated percentage increase in net operating income of a 5% increase in sales?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 11MCQ: Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett...

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The accountant for PNW, LLC has prepared a contribution format income statement. Assume that the following information is within the relevant range. Sales (9,000 units) Variable expenses Contribution margin Fixed expenses $540,000 405,000 135,000 130,500 Net operating income $ 4,500 Assuming that the information provided is within the relevant range, the contribution margin ratio is closest to:
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Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin Fixed expenses $ 15,000 9,000 6,000 3,120 $ 2,880 Net operating income and total fixed expenses were reversed. In other words, assume 14. Assume that the amounts of the company's total variable expe that the total variable expenses are $3,120 and the total fixed expenses are $9,000. Under this scenario and assuming that total sales remain the same, what is the degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 Units (the relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin Fixed expenses $ 15,000 9,000 6,000 3,120 Net operating income $2,880 4. If sales increase to 1,001 units, what would be the increase in net operating income? (Round your answer to 2 decimal places.) Increase in net operating income
[The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 15,000 Variable expenses 9,000 Contribution margin 6,000 Fixed expenses 3,120 Net operating income $ 2,880 15. Assume that the amounts of the company’s total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $3,120 and the total fixed expenses are $9,000. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in unit sales? (Round your intermediate calculations and final answer to 2 decimal places.)
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Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin Fixed expenses $ 15,000 9,000 6,000 3,120 $ 2,880 Net operating income reversed. In other words, 15. Assume that the amounts of the company's total variable expenses and total fixed expenses assume that the total variable expenses are $3,120 and the total fixed expenses are $9,000. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in unit sales? (Round your intermediate calculations and final answer to 2 decimal places.) Increase in net operating income
Required information [The following information applies to the questions displayed below.) Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin: Fixed expenses Net operating income: $ 80,000 52,000 28,000 21,848 $ 6,160 15. Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $21,840 and the total fixed expenses are $52,000. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in unit sales? (Round your intermediate calculations and final answer to 2 decimal places.) Increase in net operating income
Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 45,000 Variable expenses Contribution margin Fixed expenses 31,500 13,500 8,640 Net operating income $ 4,860 15. Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $8,640 and the total fixed expenses are $31,500. Using the degree of operating leverage, what is the estimated percent increase in net operating income and final answer to 2 decimal places.) a 5% increase in unit sales? (Round your intermediate calculations Increase in net operating income
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