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11-15 please.
Help Required information The Foundational 15 (LO5-1, LO5-3, LO5-4, LO5-5, LO5-6, LO5-7, LO5-8) The following information app

12. what is the degree of operating leverage?

13. using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales?

14.assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. in other wrds, assume that the total variable expenses are $27,720 and the total fixed expenses are $73,500. under this scenario and assuming that total sales remain the same, what is the degree of operating leverage?

15. assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. in other wrds, assume that the total variable expenses are $27,720 and the total fixed expenses are $73,500. given this scenario and assuming that total sales remain the same, using the degree of calculated operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales?
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Answer #1
11. Contribution margin ratio = Contribution margin / Sales = 31500 / 105000 30%
Break even sales in dollars = Fixed expenses / Contribution margin ratio = 27720 / 30% 92400
Margin of safety in dollars = Sales - Break even sales in dollars = 105000 - 92400 12600
Margin of safety percentage = Margin of safety in dollars / Sales = 12600 / 105000 12%
12. Degree of operating leverage = Contribution margin / Net operating income = 31500 / 3780 8.33
13. Degree of operating leverage = % change in Net operating income / % change in sales
8.33 = % change in net operating income / 5%
% change in net operating income = 8.33 * 5% 41.65%
Increase in net operating income 41.65%
14. Sales 105000
(-) Variable costs 27720
Contribution margin 77280
(-) Fixed expenses 73500
Net operating income 3780
Degree of operating leverage = Contribution margin / Net operating income = 77280 / 3780 20.44
15. Degree of operating leverage = % change in Net operating income / % change in sales
20.44 = % change in net operating income / 5%
% change in net operating income = 20.44 * 5% 102.20%
Increase in net operating income 102.20%
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