Degree of Operating Leverage: The Operating leverage effect are related to those business which are having higher proportion of fixed cost element in its total cost. In Such leverage effect of operations is computed which suggest that how many times the net income will increase as result of increase in sales. The higher the proportion of fixed cost in total cost, higher will be the degree of operating leverage. And higher times will be the percentage increase in incomes as compared to increase in sales. The Degree of operating leverage shall be computed by dividing the contribution margin earned by the net operating income of the business. Requirement1: The Computation of Degree of operating leverage.

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Answer 1

Question

Chapter 21, Problem E21.39E

To determine

Degree of Operating Leverage:

The Operating leverage effect are related to those business which are having higher proportion of fixed cost element in its total cost. In Such leverage effect of operations is computed which suggest that how many times the net income will increase as result of increase in sales.

The higher the proportion of fixed cost in total cost, higher will be the degree of operating leverage. And higher times will be the percentage increase in incomes as compared to increase in sales.

The Degree of operating leverage shall be computed by dividing the contribution margin earned by the net operating income of the business.

Requirement1:

The Computation of Degree of operating leverage.

To determine

Requirement2:

The Computation of percentage change in income as a result of % change in sales revenue.

To determine

Requirement3:

The Contribution margin income statement need to be computed.

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Bon Jovi Sports Ltd. manufactures athletic gear. One of its products is a cycling helmet that requires specialized plastic. During the quarter ending September 30, the company manufactured 4,500 helmets, using 2,500 kilograms of plastic. The plastic cost the company $16,250. According to the standard cost card, each helmet should require 0.55 kilograms of plastic at a cost of $6.80 per kilogram. Required: 1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 4,500 helmets? 2. What is the standard materials cost allowed (SQ × SP) to make 4,500 helmets? 3. What is the material's spending variance? 4. What is the material's price variance and the material's quantity variance?

Answer 2

Question

Chapter 21, Problem E21.39E

To determine

Degree of Operating Leverage:

The Operating leverage effect are related to those business which are having higher proportion of fixed cost element in its total cost. In Such leverage effect of operations is computed which suggest that how many times the net income will increase as result of increase in sales.

The higher the proportion of fixed cost in total cost, higher will be the degree of operating leverage. And higher times will be the percentage increase in incomes as compared to increase in sales.

The Degree of operating leverage shall be computed by dividing the contribution margin earned by the net operating income of the business.

Requirement1:

The Computation of Degree of operating leverage.

To determine

Requirement2:

The Computation of percentage change in income as a result of % change in sales revenue.

To determine

Requirement3:

The Contribution margin income statement need to be computed.

Expert Solution & Answer

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Answer 3

Question

Chapter 21, Problem E21.39E

To determine

Degree of Operating Leverage:

The Operating leverage effect are related to those business which are having higher proportion of fixed cost element in its total cost. In Such leverage effect of operations is computed which suggest that how many times the net income will increase as result of increase in sales.

The higher the proportion of fixed cost in total cost, higher will be the degree of operating leverage. And higher times will be the percentage increase in incomes as compared to increase in sales.

The Degree of operating leverage shall be computed by dividing the contribution margin earned by the net operating income of the business.

Requirement1:

The Computation of Degree of operating leverage.

To determine

Requirement2:

The Computation of percentage change in income as a result of % change in sales revenue.

To determine

Requirement3:

The Contribution margin income statement need to be computed.

Expert Solution & Answer

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Answer 4

Question

Chapter 21, Problem E21.39E

To determine

Degree of Operating Leverage:

The Operating leverage effect are related to those business which are having higher proportion of fixed cost element in its total cost. In Such leverage effect of operations is computed which suggest that how many times the net income will increase as result of increase in sales.

The higher the proportion of fixed cost in total cost, higher will be the degree of operating leverage. And higher times will be the percentage increase in incomes as compared to increase in sales.

The Degree of operating leverage shall be computed by dividing the contribution margin earned by the net operating income of the business.

Requirement1:

The Computation of Degree of operating leverage.

To determine

Requirement2:

The Computation of percentage change in income as a result of % change in sales revenue.

To determine

Requirement3:

The Contribution margin income statement need to be computed.

Expert Solution & Answer

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Answer 5

Chapter 21, Problem E21.39E

To determine

Degree of Operating Leverage:

The Operating leverage effect are related to those business which are having higher proportion of fixed cost element in its total cost. In Such leverage effect of operations is computed which suggest that how many times the net income will increase as result of increase in sales.

The higher the proportion of fixed cost in total cost, higher will be the degree of operating leverage. And higher times will be the percentage increase in incomes as compared to increase in sales.

The Degree of operating leverage shall be computed by dividing the contribution margin earned by the net operating income of the business.

Requirement1:

The Computation of Degree of operating leverage.

To determine

Requirement2:

The Computation of percentage change in income as a result of % change in sales revenue.

To determine

Requirement3:

The Contribution margin income statement need to be computed.

Answer 6

Chapter 21, Problem E21.39E

To determine

Degree of Operating Leverage:

The Operating leverage effect are related to those business which are having higher proportion of fixed cost element in its total cost. In Such leverage effect of operations is computed which suggest that how many times the net income will increase as result of increase in sales.

The higher the proportion of fixed cost in total cost, higher will be the degree of operating leverage. And higher times will be the percentage increase in incomes as compared to increase in sales.

The Degree of operating leverage shall be computed by dividing the contribution margin earned by the net operating income of the business.

Requirement1:

The Computation of Degree of operating leverage.

Answer 7

Chapter 21, Problem E21.39E

To determine

Degree of Operating Leverage:

The Operating leverage effect are related to those business which are having higher proportion of fixed cost element in its total cost. In Such leverage effect of operations is computed which suggest that how many times the net income will increase as result of increase in sales.

The higher the proportion of fixed cost in total cost, higher will be the degree of operating leverage. And higher times will be the percentage increase in incomes as compared to increase in sales.

The Degree of operating leverage shall be computed by dividing the contribution margin earned by the net operating income of the business.

Requirement1:

The Computation of Degree of operating leverage.

Answer 8

To determine

Requirement2:

The Computation of percentage change in income as a result of % change in sales revenue.

Answer 9

To determine

Requirement2:

The Computation of percentage change in income as a result of % change in sales revenue.

Answer 10

To determine

Requirement3:

The Contribution margin income statement need to be computed.

Answer 11

To determine

Requirement3:

The Contribution margin income statement need to be computed.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 21 - For Frank’s Funky Sounds, straight-line...Ch. 21 - Prob. 2QC Ch. 21 - Prob. 3QC Ch. 21 - Prob. 4QC Ch. 21 - Prob. 5QC Ch. 21 - On a CVP graph, the total cost line intersects the...Ch. 21 - If a company increases its sales price per unit...Ch. 21 - Prob. 8QC Ch. 21 - Prob. 9QC Ch. 21 - Prob. 10QC

Requirement2: The Computation of percentage change in income as a result of % change in sales revenue.

Requirement3: The Contribution margin income statement need to be computed.

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Chapter 21 Solutions

Requirement2:

The Computation of percentage change in income as a result of % change in sales revenue.

Requirement3:

The Contribution margin income statement need to be computed.