Shorter Company had originally expected to earn operating income of $130,000 in the coming year. Shorter's degree of operating leverage is 2.4. Recently, Shorter revised its plans and now expects to increase sales by 20% next year. What is the percent change in operating income expected by Shorter in the coming year?

Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter22: Master Budget (master)
Section: Chapter Questions
Problem 5R: Suppose the company has just the opposite news and now expects unit sales for August, September, and...
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Shorter Company had originally expected to earn
operating income of $130,000 in the coming year.
Shorter's degree of operating leverage is 2.4. Recently,
Shorter revised its plans and now expects to increase
sales by 20% next year.
What is the percent change in operating income
expected by Shorter in the coming year?
Transcribed Image Text:Shorter Company had originally expected to earn operating income of $130,000 in the coming year. Shorter's degree of operating leverage is 2.4. Recently, Shorter revised its plans and now expects to increase sales by 20% next year. What is the percent change in operating income expected by Shorter in the coming year?
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