
Concept introduction:
A contribution margin income statement is an income statement in which all variable expenses are subtracted from sales to get contribution margin, and all fixed expenses are then deducted to get net
Contribution margin means sales price less variable costs.
Contribution margin ratio means the difference between a company's sales and variable expenses, put as a in percentage terms.
The contribution margin ratio is a formula that calculates the percentage of contribution margin to net sales.
Operating leverage is the leverage according to which a firm increases its operating revenue by increasing its revenue.
Requirement 1:
To determine:
We have to determine the degree of operating leverage for year 2017.
Requirement 2:
To determine:
We have to determine the pre-tax income if sales decreases by 5% .
Requirement 3:
To determine:
We have to determine the contribution income statement if sales decreases by 5%.

Want to see the full answer?
Check out a sample textbook solution
Chapter 21 Solutions
Loose Leaf for Fundamental Accounting Principles
- Is the estimated variable delivery cost component per shipment? General accountingarrow_forwardClark Company manufactures a product with a standard direct labor cost of two hours at $16.87 per hour. During July, 2,232 units were produced using 4,267 hours at $15.96 per hour. What is the labor quantity variance?arrow_forwardCan you help me solve this general accounting question using the correct accounting procedures?arrow_forward
- A local bakery sells 12,000 loaves of sourdough bread each year. The loaves are ordered from an outside supplier, and it takes 4 days for each shipment of loaves to arrive. Ordering costs are estimated at $18 per order. Carrying costs are $6 per loaf per year. Assume that the bakery is open 300 days a year. What is the maximum inventory of loaves held in a given ordering cycle? Provide Answerarrow_forwardHello tutor solve this question and accounting questionarrow_forwardPlease provide the answer to this general accounting question using the right approach.arrow_forward
- Falcon Manufacturing, which uses the high-low method, reported total costs of $12.80 per unit at its lowest production level of 5,000 units. When production tripled to its highest level, the total cost per unit dropped to $7.90. Falcon Manufacturing would estimate its variable cost per unit as:arrow_forwardI am trying to find the accurate solution to this general accounting problem with the correct explanation.arrow_forwardWhat is the estimated ending inventory?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





