Concept introduction:
Net operating income:
Net operating income is the revenue derived from the property excluding all the operating expenses. It is a calculation that is used to identify the profitability of income generated from investments. The net operating income does not include capital expenditure.
Degree of operating leverage:
When a firm has to recover needs to recover the fixed costs irrespective of the sales volume of the firm, operating leverage occurs in the firm. When operating leverage occurs in the firm, the percentage change in revenue is found to be more than the percentage change in sales provided the fixed costs remain the same.
To estimate: The percentage increase in net operating income that would result from a 5% increase in unit sales
Want to see the full answer?
Check out a sample textbook solutionChapter 5 Solutions
17E MANAGERIAL ACCOUNTING CUSTOM
- In this article with Brian Hock - Certifications: Your Ticket to Career Success and Growth please read it and discuss what you have learned.arrow_forwardCan you please confirm if my below calculations are correctarrow_forwardJesse Brimhall is single. In 2024, his itemized deductions were $12,000 before considering any real property taxes he paid during the year. Jesse's adjusted gross income was $70,000 (also before considering any property tax deductions). In 2024, he paid real property taxes of $3,000 on property 1 and $1,200 of real property taxes on property 2. He did not pay any other deductible taxes during the year. If property 1 is Jesse's business building (he owns the property) and property 2 is his primary residence, what is his taxable income after taking property taxes into account (ignore the deduction for qualified business income)?arrow_forward
- Sarah (single) purchased a home on January 1, 2008, for $600,000. She eventually sold the home for $800,000. What amount of the $200,000 gain on the sale does Sarah recognize in each of the following alternative situations? (Assume accumulated depreciation on the home is $0 at the time of the sale.) Sarah used the property as a vacation home through December 31, 2021. She then used the home as her principal residence from January 1, 2022, until she sold it on January 1, 2025.arrow_forwardAll of the following are reasons why IT is important to accountants except: a.IT questions often appear on professional certification examinations b.The costs of IT are skyrocketing c.Accountants often help clients make IT decisions d.Auditors must evaluate computerized systemsarrow_forwardWhy it is important for internal controls to be maintained: a. Safeguard assets (from fraud or errors) b. Preserve the accuracy and integrity of the accounting data c. Promote operational efficiency d. All the answers are correctarrow_forward
- Data transcription is best described as: a. An important way to limit fraud and embezzlement b. Labour-intensive and time-consuming c. Always necessary in AISs d.An efficient process Why it is important for internal controls to be maintained: a. Safeguard assets (from fraud or errors) b. Preserve the accuracy and integrity of the accounting data c. Promote operational efficiency d. All the answers are correct All of the following are reasons why IT is important to accountants except: a. IT questions often appear on professional certification examinations b.The costs of IT are skyrocketing c.Accountants often help clients make IT decisions d.Auditors must evaluate computerized systemsarrow_forwardA company's 6% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $527.14. The company's federal-plus-state tax rate is 25%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to one decimal place. %arrow_forwardAnswer this Question accuratelyarrow_forward
- To identify all those employees receiving payroll cheques but who have no matching record in a payroll master file, you should use a: a. Auditor b. Find unmatched records query c. Update query d. Cross-tabs queryarrow_forwardLupita is a paid Tax return prepare. She failed to sign 10 tax returns which she prepared. What is the amount of the penalty with which she could be assessed?arrow_forwardSelling the assets be?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