Ostler Company's net income last year was $10,000 and its contribution margin was $50,000. Using the operating leverage concept, if the company's sales increase next year by 8%, net income can be expected to increase by: A. 16% B. 20% C. 40% D. 160%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
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Problem 20P
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Ostler Company's net income last year was $10,000 and its
contribution margin was $50,000. Using the operating leverage
concept, if the company's sales increase next year by 8%, net income
can be expected to increase by:
A. 16%
B. 20%
C. 40%
D. 160%
Transcribed Image Text:Ostler Company's net income last year was $10,000 and its contribution margin was $50,000. Using the operating leverage concept, if the company's sales increase next year by 8%, net income can be expected to increase by: A. 16% B. 20% C. 40% D. 160%
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