ngberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows: Amount Percent of SalesSales$145,000 100%Variable expenses 58,000 40%Contribution margin 87,000 60%Fixed expenses 22,000 Net operating income$65,000 Using the degree of operating leverage, estimate the impact on net operating income of a 23% increase in sales. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e 0.1234 should be entered as 12.34).) Net operating incomeincreasesby %

Answered: ngberg Company installs lawn sod in…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 16E

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ngberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows:

	Amount		Percent of Sales
Sales	$	145,000		100	%
Variable expenses		58,000		40	%
Contribution margin		87,000		60	%
Fixed expenses		22,000
Net operating income	$	65,000

Using the degree of operating leverage, estimate the impact on net operating income of a 23% increase in sales. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e 0.1234 should be entered as 12.34).)

Net operating income

increases

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Estimated percentage increase in operating income = ( Degree of operating leverage * Percentage increase in sales )

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