Question

А Clone Window Question 1 Question 107 "The de operating leverage for ABC C 1.8 when ses are Des 200,000 and not income is 24.000 increase by 10%, what is not come expected to be TTTT: A XOOQEEZETT points ving to the question will save this response Words Question 107 > >> Close Window

Answer 1

Operating leverage= Contribution/Net Income

1.8= contribution/24000

contribution= 1.8X24000= 43200

fixed expenses= contribution-net income

= 43200-24000= 19200

If sales increased by 16%, contribution will also increase by 16%.
new contribution= 43200+(43200X16%)= 50112

net income= new contribution-fixed expenses
= 50112-19200= 30912