Sales Variable expenses Contribution margin Fixed expenses Net operating income. Amount $ 140,000 56,000 84,000 22,000 $ 62,000 Percent of Sales 100% 40% 60% Required: 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 21% increase in sales. . Construct a new contribution format income statement for the company assuming a 21% increase in sales.
Sales Variable expenses Contribution margin Fixed expenses Net operating income. Amount $ 140,000 56,000 84,000 22,000 $ 62,000 Percent of Sales 100% 40% 60% Required: 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 21% increase in sales. . Construct a new contribution format income statement for the company assuming a 21% increase in sales.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income.
Amount
$ 140,000
56,000
84,000
22,000
$ 62,000
Required:
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 21% increase in sales.
3. Construct a new contribution format income statement for the company assuming a 21% increase in sales.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Percent of
Sales
100%
40%
60%
Sales
Variable expenses
Contribution margin
Construct a new contribution format income statement for the company assuming a 21% increase in sales.
Fixed expenses
Net operating income
Engberg Company
Contribution Income Statement
Amount Percent of Sales
$ 189,005
105 %
75,605
%
113,400
105 %
22,000
$ 91,400
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