Quick answer of this accounting questions Rockford Manufacturing reports the following data:⚫ Sales: $850,000. Variable costs: $425,000⚫ Contribution margin: $425,000•. Fixed costs: $255,000⚫ Income from operations: $170,000Calculate Rockford Manufacturing's operating leverage.

Step 1: Definition of Degree of Operating LeverageDegree of operating leverage (DOL) measures how…

Answered: Rockford Manufacturing reports the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sales = 962,000, Variable Costs = 467,500, Fixed Costs = 165,000
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What is the operating leverage for this general accounting question?
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Asha Inc. and Samir Inc. have the following operating data: Sales Variable costs Contribution margin Fixed costs Asha Inc. $2,500,000 (1,500,000) $1,000,000 (800,000) $200,000 Asha Inc. Samir Inc. Samir Inc. $4,000,000 (2,500,000) $1,500,000 (900,000) $600,000 Operating income a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. 150 75 Samir Inc. b. How much would operating income increase for each company if the sales of each increased by 30%? Dollars Percentage 30 % 30 % c. The difference in the increases of operating income is due to the difference in the operating leverages. Asha Inc.'s higher operating leverage means that its fixed costs are a smaller Inc.'s. percentage of contribution margin than are Samir

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Rockford Manufacturing reports the following data: ⚫ Sales: $850,000 . Variable costs: $425,000 ⚫ Contribution margin: $425,000 • . Fixed costs: $255,000 ⚫ Income from operations: $170,000 Calculate Rockford Manufacturing's operating leverage.