provide answer of this Accounting Subject Question Using the degree of operating leverage, what is the estimated percentageincrease in net operating income of a 8% increase in sales? (Do not roundintermediate calculations. Round your answer to 2 decimal places.)Maple Industries prepared the following contribution format incomestatement based on a sales volume of 2,500 units (the relevant range ofproduction is 1,000 units to 3,000 units):Sales $ 45,000Variable expenses 24,000Contribution margin 21,000Fixed expenses 13,500Net operating income $ 7,500

Step 1: Define Operating Leverage: The operating leverage is a financial metric that determines the…

Answered: Using the degree of operating leverage,…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 16E

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Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 Units (the relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin Fixed expenses $ 15,000 9,000 6,000 3,120 Net operating income $2,880 4. If sales increase to 1,001 units, what would be the increase in net operating income? (Round your answer to 2 decimal places.) Increase in net operating income
1. The net income before tax that the company would disclose on an absorption-costing income statement is? 2. The contribution margin that the company would disclose on an absorption-costing income statement is?
Data from a company's last period of operations shows sales of 2,000 units, total contribution margin of P50,000, and income after subtracting fixed costs of P30,000 is P20,000. Should the company experience sales of 2,400 units (within the relevant range, no sales price increase), net income will be: a.P40,000 b.P30,000 c.P10,000 d.P20,000
Oslo company prepared the following contrubition format income statement based on a sales volume of 1,000 unites (the relevant range of production is 500 units to 1,500 units). Sales.... $20,000 Variable expenses ... 12,000 Contribution margin .... 8,000 Fixed expenses ... 6,000 Net operating income... $2,000 4) If the sales increase to 1,001 units, what would be the increase in net operating income ? 5) If sales decline to 900 units , what would be the net operating income? 6) If selling price increases by $2 per unit and the sales volume decreases by 100 units , what would be the net operating income ?
Matamad Inc. Provides you with the following data on its operation for analysis:Unit selling priceP40Variable costs and expenses per unit.P30Fixed cost and expenses per annum.P48,000REQUIRED:a. Contribution margin per unitb. Contribution margin percentagec. BEP sales volume (units)d. BEP peso salese. Peso sales with desired income of P9,000f. Peso sales with desired income P13,000 after 32% income tax
V. A company’s contribution format income statement for the previous follows: AmountSales P300,000Variable expenses 120,000Contribution margin 180,000Fixed expenses 108,000Net operating income P72,000 Required:a. Compute the company’s degree of operating leverage. b. Using the computed degree of operating leverage, estimate the effect on net operating income of a 5% increase in sales. c. Prepare an income statement using contribution format to verify your answer in (b)
The following information is extracted from the income statement of Al Shams Private Ltd. The Price (P) per unit of product is OMR 12 and Variable cost (VC) per unit is OMR 7 and fixed operating cost is OMR 8,000.Answer the following question after analyzing the given table. YEAR 1 YEAR 2 Sales (in units) 5,000 9,500 Sales Revenue (in OMR) ? ? Less: Variable operating costs ? ? Less: Fixed operating costs 8,000 ? Earnings before interest and taxes (EBIT) ? ? Complete the table Calculate the Degree of Operating Leverage (DOL). Interpret your answer (DOL).
Shalom Company had sales of P1,500,000 for the first quarter of 2022. During the period, the company had the following costs: Cost of goods sold Selling expenses Administrative expenses Fixed 230,000 200,000 160,000 Variable 320,000 170,000 110,000 Amounts must be in whole numbers. Example: 88,000 or (88,000) Format of percentages: 88% Words must be in capital letters. Contribution margin Contribution margin ratio Operating income If Shalom Company used the same cost structure for cost-volume-profit analysis and sold 10,000 units in the second quarter of 2022, did the company earn a profit? Yes or No?
Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 10,000 5,500 Variable expenses Contribution margin Fixed expenses 4,500 2,250 Net operating income $4 2,250 4. If sales increase to 1,001 units, what would be the increase in net operating income? (Round your answer to 2 decimal places.) Increase in net operating income
1.Mr. Jasin expects the company to earn an operating income of RM296,400. Estimatethe number of units that must be sold. 2.
Davison Co. prepared the following contribution format income statement based on a sales volume of 10,000 units (the relevant range of production is 5,000 units to 15,000 units): Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 200,000 120,000 80,000 60,000 20,000 Increase in net operating income $ Required: If sales increased to 10,001 units, what would be the increase in net operating income?

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