Sales $400,000 106,000 Variable expenses Contribution margin Fixed expenses 294,000 196,000 Operating income $ 98,000 a. Compute the degree of operating leverage at the current level of sales. Degree of operating leverage b. The president expects sales to increase by 15% next year. By how much should operating income increase? Operating income increases by

Sales $400,000 106,000 Variable expenses Contribution margin Fixed expenses 294,000 196,000 Operating income $ 98,000 a. Compute the degree of operating leverage at the current level of sales. Degree of operating leverage b. The president expects sales to increase by 15% next year. By how much should operating income increase? Operating income increases by

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 20MC: Wallace Industries has total contribution margin of $58,560 and net income of $24,400 for the month...

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Wallace Industries has total contribution margin of $58,560 and net income of $24,400 for the month of April. Wallace expects sales volume to increase by 5% in May. What are the degree of operating leverage and the expected percent change in income for Wallace Industries? 0.42 and 2.2% 0.42and5% 2.4andl2% 2.Sandl3%
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