A Corporation has provided its contribution format income statement for August Sales $863,300 Variable expenses 424,200...
A Corporation has provided its contribution format income statement for August
Sales $863,300
Variable expenses 424,200
Contribution margin 436,100
Fixed expenses 352,400
net operating income $83,700
a. Compute the degree of operating leverage to two decimal places.
b. Using the degree of operating leverage, estimate the percentage in net operating income that should result from a 14% increase in sales.
Homework Answers
Degree of operating leverage = Contribution margin ∕ Net operating income
$ 436100/ $83700 = 5.21
Operating Leverage= % change in income / % change in sales
Let's assume that X is the % change in income
5.21= X ∕ 14%
X= 72.94%
Add Answer to:
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