Chapter 5, Problem 23P

To determine

Contribution margin ratio:When the difference between the sales revenue and variable expenses is expressed in the form of percentage is called a contribution margin ratio.

Degree of operating leverage:A degree of operating leverage shows the impact of operating leverage on the operating income of a company.

1. The contribution margin ratio

2. The break-even point in dollar sales.

3. The dollar increase in net operating increase.

4.

a) The degree of operating leverage of last year.

b) The percentage increase in net operating income

5. The net operating income and recommendation.

6. The increase of net operating income.