r high electromagnetic radiation environments. weiter Company manufactures and sells a specialized cordless telephone ntribution format income statement for the most recent year is given The company's low Total Per Unit % of Sales Sales (20,000 units) Less: Variable Contribution margin Less Fixed expenses P1,200,000 P60 100% expenses 900,000 45 P 300,000 15 240,000 P 60,000 Net operating income 22

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Eercise 1 CVP Relationships
high electromagnetic radiation environments.
Kelter Company manufactures and sells a specialized cordless telephone
contribution format income statement for the most recent year is grven
L Exurcises
CVP Relationships
The companys
ur
helow
Total
Per Unit % of Sales
Sales (20,000 units)
Less: Variable expenses
Contribution margin
Less Fixed expenses
P1,200,000 P60
100%
900,000 45
P 300,000 15
240,000
Net operating income
P 60,000
Management is anxious to improve the company's profit performance and
has asked for an analysis of a number of items.
Transcribed Image Text:Eercise 1 CVP Relationships high electromagnetic radiation environments. Kelter Company manufactures and sells a specialized cordless telephone contribution format income statement for the most recent year is grven L Exurcises CVP Relationships The companys ur helow Total Per Unit % of Sales Sales (20,000 units) Less: Variable expenses Contribution margin Less Fixed expenses P1,200,000 P60 100% 900,000 45 P 300,000 15 240,000 Net operating income P 60,000 Management is anxious to improve the company's profit performance and has asked for an analysis of a number of items.
Degree of Operating Leverage
Operating Leverage =. Sales / Net Operating income
= 1200000 / 60000
= 20 Times
Increase in sales by 8%
Increase in sales by 8%
Units
Per Unit
Units
Value
Sales
20000
60
1200000
21600
1296000
Variable expense
45
900000
972000
Contribution
15
300000
324000
Less: Fixed Expenses
240000
240000
Net Operating Income
60000
84000
Net Operating Income Shall Increase = Change in sales Changes in Net Operating Income= 9600024000 =
4 Times
Transcribed Image Text:Degree of Operating Leverage Operating Leverage =. Sales / Net Operating income = 1200000 / 60000 = 20 Times Increase in sales by 8% Increase in sales by 8% Units Per Unit Units Value Sales 20000 60 1200000 21600 1296000 Variable expense 45 900000 972000 Contribution 15 300000 324000 Less: Fixed Expenses 240000 240000 Net Operating Income 60000 84000 Net Operating Income Shall Increase = Change in sales Changes in Net Operating Income= 9600024000 = 4 Times
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