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Sales Variable expenses Contribution margin Fixed expenses Net operating income Required: Amount $ 82,000 Percent of Sales 100% 32,800 49,200 40 60% 39,360 $ 9,840 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 6% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 6% increase in unit sales.

Sales Variable expenses Contribution margin Fixed expenses Net operating income Required: Amount $ 82,000 Percent of Sales 100% 32,800 49,200 40 60% 39,360 $ 9,840 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 6% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 6% increase in unit sales.

FINANCIAL ACCOUNTING
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 Variable expenses Contribution margin Fixed expenses Net operating income Required: Amount $ 82,000 32,800 49,200 39,360 $ 9,840 1. What is the company's degree of operating leverage? Percent of Sales 100% 40 60% 2. Using the degree of operating leverage, estimate the impact on net operating income of a 6% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 6% increase in unit sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the company's degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage Required 1 Required 2 >
Transcribed Image Text:Sales Variable expenses Contribution margin Fixed expenses Net operating income Required: Amount $ 82,000 32,800 49,200 39,360 $ 9,840 1. What is the company's degree of operating leverage? Percent of Sales 100% 40 60% 2. Using the degree of operating leverage, estimate the impact on net operating income of a 6% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 6% increase in unit sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the company's degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage Required 1 Required 2 >
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