3. Construct a new contribution format income statement for the company assuming a 18% increase in sales.
1. Degree of operating leverage = Contribution margin/net operating income
= 79,200/59,200
= 1.34
.
2. Net operating income increases by 24.12%
.
Sales | 155,760 | 100% |
Variable cost | 62,304 | 40% |
Contribution margin | 93,456 | 60% |
Fixed expenses | 20,000 | |
Net operating income | 73,456 |
Note : I have rounded some numbers. Comment if you face any issues
3. Construct a new contribution format income statement for the company assuming a 18% increase in...
Engberg Company installs lawn sod in home yards. The company’s
most recent monthly contribution format income statement
follows:
Exercise 3-9 Compute and Use the Degree of Operating Leverage [L03-8] Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Percent Amount $144,000 57,600 86,400 22,000 of Sales 100% 40% Sales Variable expenses Contribution margin Fixed expenses Net operating income 60% $ 64,400 Required 1. Compute the company's degree of operating leverage. (Round...
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows: Amount Percent of Sales Sales $ 132,000 100 % Variable expenses 52,800 40 % Contribution margin 79,200 60 % Fixed expenses 17,000 Net operating income $ 62,200 Required: 1. What is the company’s degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 15% increase in sales. 3. Construct a new contribution...
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Percent of Sales 100% 40% Amount $ 132,000 52,800 79,200 16,000 $ 63,200 Sales Variable expenses Contribution margin Fixed expenses Net operating income 60% Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 26% increase in sales. 3. Construct a new contribution format income statement...
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Amount $ 148,000 59,200 Percent of Sales 100% 40% 60% Sales Variable expenses Contribution margin Fixed expenses Net operating income 88,800 23,000 $ 65,800 Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 12% increase in sales. 3. Construct a new contribution format income statement...
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 147,000 58.800 88,200 23,000 $ 65,200 Percent of Sales 100% 40% 60% Required: 1. Compute the company's degree of operating leverage (Round your answer to 2 decimal places.) Degree of operating leverage 2. Using the degree of operating leverage, estimate the impact on net operating income of a 11% increase...
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: $ Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount 140,000 56,000 84,000 17,000 67,000 Percent of Sales 100% 40% 60% $ Required: 1. Compute the company's degree of operating leverage. (Round your answer to 2 decimal Degree of operating leverage 2. Using the degree of operating leverage, estimate the impact on net operating income of a 27% increase in...
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Amount $148,000 59.200 Percent of Sales 100% 40% Sales Variable expenses Contribution margin Fixed expenses 88,800 24,000 60% Net operating income 64,800 Required 1. Compute the company's degree of operating leverage. (Round your answer to 2 decimal places.) Degree of operating leverage 2. Using the degree of operating leverage, estimate the impact on net operating income of a 15% increase in sales....
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Amount $ 137,000 54,800 Percent of Sales 100% 403 608 Sales Variable expenses Contribution margin Fixed expenses Net operating income 82,200 19,000 $ 63,200 Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 28% increase in sales. 3. Construct a new contribution format income statement...
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 131,000 52,400 78,600 23,000 $ 55,600 Percent of Sales 100% 40% 60% Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 17% increase in unit sales. 3. Construct a new contribution format income...
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement folows Amount s 149.000 Sales 100% 40% 60% Variablo expenses Contribution margin Fixed expenses Net operating inceme 89 400 24,000 S 65,400 Required: 1. Compute the company's degree of operating leverage (Round your answer to 2 decimal places.) 2. using the degree of operat g leverage estr ale he impact nne opera ng inco e of a 11% increase nsm (Round your Round...