Sales $400,000 106,000 Variable expenses Contribution margin Fixed expenses 294,000 196,000 Operating income $ 98,000 a. Compute the degree of operating leverage at the current level of sales. Degree of operating leverage b. The president expects sales to increase by 15% next year. By how much should operating income increase? Operating income increases by

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Sales
$400,000
106,000
Variable expenses
Contribution margin
Fixed expenses
294,000
196,000
Operating income
$ 98,000
a. Compute the degree of operating leverage at the current level of sales.
Degree of operating leverage
b. The president expects sales to increase by 15% next year. By how much should operating income increase?
Operating income increases by
Transcribed Image Text:Sales $400,000 106,000 Variable expenses Contribution margin Fixed expenses 294,000 196,000 Operating income $ 98,000 a. Compute the degree of operating leverage at the current level of sales. Degree of operating leverage b. The president expects sales to increase by 15% next year. By how much should operating income increase? Operating income increases by
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