Homework Answers
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Increase in income = Degree of operating leverage * Increase in sales = 3 * 35% = 105% Option D is the answer |
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If a company has a degree of operating leverage of 3 and sales increase by 35%, then profit will increase by 70% to...
a) Degree of operating leverage = Contribution margin / profit Degree of operating leverage = 15,600,000...
a) Degree of operating leverage = Contribution margin / profit Degree of operating leverage = 15,600,000 / 6,000,000 = 1.625 Sales = 1200000 x 24 = 28800000 Less: Variable cost = 1200000 x 11 = 13200000 Contribution Margin = 28800000 - 13200000 = 15,600,000 Less: Fixed cost = 9,600,000 Profit = 15600000-9600000 = 6000000 b) Break even units Contribution margin per unit = Selling price - variable cost = $24 - $11 = $13 Break even units = Fixed cost...
13.What is the degree of operating leverage? 14.Using the degree of operating leverage, what is the...
13.What is the degree of operating leverage?
14.Using the degree of operating leverage, what is the
estimated percent increase in net operating income of a 5% increase
in sales?
15.Assume that the amounts of the company’s total variable
expenses and total fixed expenses were reversed. In other words,
assume that the total variable expenses are $8,400 and the total
fixed expenses are $21,000. Under this scenario and assuming that
total sales remain the same, what is the degree of operating...
13.What is the degree of operating leverage? 14.Using the degree of operating leverage, what is the...
13.What is the degree of operating leverage?
14.Using the degree of operating leverage, what is the
estimated percent increase in net operating income of a 5% increase
in sales?
15.Assume that the amounts of the company’s total variable
expenses and total fixed expenses were reversed. In other words,
assume that the total variable expenses are $8,400 and the total
fixed expenses are $21,000. Under this scenario and assuming that
total sales remain the same, what is the degree of operating...
degree of operating leverage and financial leverage
reflects last year’s operations:Sales $18,000,000Variable costs 7,000,000Revenue before fixed costs $11,000,000Fixed costs 6,000,000EBIT $5,000,000Interest expense 1,750,000Earnings before taxes (EBT) $3,250,000Taxes 1,250,000Net income $2,000,000REQUIRED:1. At this level of output, what is the degree of operating leverage?2. What is the degree of financial leverage?3. What is the degree of combined leverage?4. If sales increase by 15%, by what percent would EBT (and net income) increase?5. What is your firm’s break-even point in sales dollars?
Using the degree of operating leverage, what is the estimated percent increase in net operating income...
Using the degree of operating leverage, what is the estimated
percent increase in net operating income of a 5% increase in sales?
(Round your intermediate calculations and final answer to 2
decimal places.)
Assume that the amounts of the company’s total variable expenses
and total fixed expenses were reversed. In other words, assume that
the total variable expenses are $30,100 and the total fixed
expenses are $65,000. Under this scenario and assuming that total
sales remain the same, what is...
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...
Degree of Operating Leverage
Exercise 9-32 (Static) Degree of Operating Leverage (DOL) [LO 9-5]TastyKreme and Krispy Kake are both producers of baked goods, but each has followed a different production strategy. The differences in their strategies resulted in differences in their cost structure, as shown in the following table: TastyKremeKrispy KakeEstimated sales in units20,00015,000Unit price6.008.00Variable cost per unit3.003.00Total fixed costs$ 30,000$ 45,000 Required:1. Compute the operating income and degree of operating leverage for each company. (Round "Degree of operating leverage" to 1 decimal place.)2. Assuming sales volume for...
Impact of Increased Sales on Operating Income Using the Degree of Operating Leverage Chillmax Company had...
Impact of Increased Sales on Operating Income Using the Degree of Operating Leverage Chillmax Company had planned to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 3,500 units sold is $58,500. The degree of operating leverage is 2.3. Now Chillmax expects...
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....
11-15 please. 12. what is the degree of operating leverage? 13. using the degree of operating...
11-15 please.
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...
13.What is the degree of operating leverage?
14.Using the degree of operating leverage, what is the
estimated percent increase in net operating income of a 5% increase
in sales?
15.Assume that the amounts of the company’s total variable
expenses and total fixed expenses were reversed. In other words,
assume that the total variable expenses are $8,400 and the total
fixed expenses are $21,000. Under this scenario and assuming that
total sales remain the same, what is the degree of operating...
13.What is the degree of operating leverage?
14.Using the degree of operating leverage, what is the
estimated percent increase in net operating income of a 5% increase
in sales?
15.Assume that the amounts of the company’s total variable
expenses and total fixed expenses were reversed. In other words,
assume that the total variable expenses are $8,400 and the total
fixed expenses are $21,000. Under this scenario and assuming that
total sales remain the same, what is the degree of operating...
Using the degree of operating leverage, what is the estimated
percent increase in net operating income of a 5% increase in sales?
(Round your intermediate calculations and final answer to 2
decimal places.)
Assume that the amounts of the company’s total variable expenses
and total fixed expenses were reversed. In other words, assume that
the total variable expenses are $30,100 and the total fixed
expenses are $65,000. Under this scenario and assuming that total
sales remain the same, what is...
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....
11-15 please.
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...
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