Homework Answers
% of sales reduce = $10000 / 100000 = 10%
Impact on operating income = sales reduce % x DOL
= 10% X 2 = 20%
Option D. is correct answer.
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Company A's monthly sales is $100,000 and degree of operating leverage (DOL) is 2. In December, Company A expects that...
Maham has a 2.5 DOL (degree of operating leverage) and a 2.0 DFL (degree of financial...
Maham has a 2.5 DOL (degree of operating leverage) and a 2.0 DFL (degree of financial leverage). If it wants a 35% increase in EPS, what increase in sales does it need? a. 6% b. 7% c. 9% d. 35%
2. A review of the degree of operating leverage (DOL) It is December 31. Last year,...
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1. What is the company’s degree of operating leverage? 2. Using the degree of operating leverage,...
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 18% increase in sales.
3. Construct a new contribution format income statement for
the company assuming a 18% increase in sales.
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 $ 143.000 57,200 85,800 21,000...
Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating...
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 for the company assuming a 28% increase in sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Construct a new contribution format income statement for the company assuming a 28% increase in sales....
Tang Co.'s sales increase by 15%. If Tang Co. has a degree of operating leverage (DOL)...
Tang Co.'s sales increase by 15%. If Tang Co. has a degree of operating leverage (DOL) of 3.0, what is the expected change in EBIT? а. 5% b. 15% C. 30% d. 45%
5. Computing and interpreting the degree of operating leverage (DOL) It is December 31. Last year,...
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SCompute and Use the Degree of Operating Leverage. Engberg Company installs lawn sod in home yards...
SCompute and Use the Degree of Operating Leverage. Engberg Company installs lawn sod in home yards The company's most recent monthly contribution format income statement is as fol- lows: Total $80,000 32,000 48.000 38,000 10,000 Sales % of Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income 100% 40% 60% Compute the company's degree of operating leverage. a. b. Using the degree of operating leverage, estimate the impact on net operating income of a 5 % in crease in...
Troy Co.'s sales increase by 15%. If Troy Co. has a degree of operating leverage (DOL) of 3.0, what is the expected cha...
Troy Co.'s sales increase by 15%. If Troy Co. has a degree of operating leverage (DOL) of 3.0, what is the expected change in EBIT? a. 5%. b. 15% c. 30%. d. 45%.
Exercise 5-9 Compute and Use the Degree of Operating Leverage (L05-8] Engberg Company installs lawn sod...
Exercise 5-9 Compute and Use the Degree of Operating Leverage (L05-8] Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Amount $ 80,000 32,000 Percent of Sales 100% 40% 60% Sales Variable expenses Contribution margin Fixed expenses Net operating income 48,000 38,000 $ 10,000 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 5%...
Exercise 2-9 (Algo) Compute and Use the Degree of Operating Leverage (LO2-8] Engberg Company installs lawn...
Exercise 2-9 (Algo) Compute and Use the Degree of Operating Leverage (LO2-8] 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 $ 127,000 50, 800 76,200 18,000 $ 58,200 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...
Maham has a 2.5 DOL (degree of operating leverage) and a 2.0 DFL (degree of financial leverage). If it wants a 35% increase in EPS, what increase in sales does it need? a. 6% b. 7% c. 9% d. 35%
2. A review of the degree of operating leverage (DOL) It is December 31. Last year, Western Gas & Electric Company (WGEC) had sales of $8,000,000, and it forecasts that next year's sales will be $8,560,000. Its fixed costs have been and are expected to continue to be $600,000, and its variable cost ratio is 55.00% WGEC's capital structure consists of a $13.5 million bank loan, on which it pays an interest rate of 6%, and 300,000 shares of common...
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 18% increase in sales.
3. Construct a new contribution format income statement for
the company assuming a 18% increase in sales.
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 $ 143.000 57,200 85,800 21,000...
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 for the company assuming a 28% increase in sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Construct a new contribution format income statement for the company assuming a 28% increase in sales....
Tang Co.'s sales increase by 15%. If Tang Co. has a degree of operating leverage (DOL) of 3.0, what is the expected change in EBIT? а. 5% b. 15% C. 30% d. 45%
5. Computing and interpreting the degree of operating leverage (DOL) It is December 31. Last year, Praxis Corporation had sales of $16,000,000, and it forecasts that next year's sales will be $17,600,000. Its fixed costs have been and are expected to continue to be $1,200,000, and its variable cost ratio is 40.00%. Praxis's capital structure consists of a $13.5 million bank loan, on which it pays an interest rate of 6%, and 300,000 shares of common equity. The company's profits...
SCompute and Use the Degree of Operating Leverage. Engberg Company installs lawn sod in home yards The company's most recent monthly contribution format income statement is as fol- lows: Total $80,000 32,000 48.000 38,000 10,000 Sales % of Sales Variable Expenses Contribution Margin Fixed Expenses Net Operating Income 100% 40% 60% Compute the company's degree of operating leverage. a. b. Using the degree of operating leverage, estimate the impact on net operating income of a 5 % in crease in...
Troy Co.'s sales increase by 15%. If Troy Co. has a degree of operating leverage (DOL) of 3.0, what is the expected change in EBIT? a. 5%. b. 15% c. 30%. d. 45%.
Exercise 5-9 Compute and Use the Degree of Operating Leverage (L05-8] Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Amount $ 80,000 32,000 Percent of Sales 100% 40% 60% Sales Variable expenses Contribution margin Fixed expenses Net operating income 48,000 38,000 $ 10,000 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 5%...
Exercise 2-9 (Algo) Compute and Use the Degree of Operating Leverage (LO2-8] 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 $ 127,000 50, 800 76,200 18,000 $ 58,200 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...
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