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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.

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. 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
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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