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This year, the company's sales has increased from $200,000 to $240,000 and its profit has increased by $12,000 compared to last year. The Degree of Operating Leverage (DOL) this year is 4.00. If the sales are expected to increase by 5% next year, how much profit does the company will make next year? A. S 14,400 В. 18,000 С. 18,900 D. 21,600 E. None of the above

This year, the company's sales has increased from $200,000 to $240,000 and its profit has increased by $12,000 compared to last year. The Degree of Operating Leverage (DOL) this year is 4.00. If the sales are expected to increase by 5% next year, how much profit does the company will make next year? A. S 14,400 В. 18,000 С. 18,900 D. 21,600 E. None of the above

EBK CFIN
EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter16: Financial Planning And Control
Section: Chapter Questions
Problem 17PROB
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13 This year, the company's sales has increased from $200,000 to $240,000 and its profit has increased by $12,000 compared to last year. The Degree of Operating Leverage (DOL) this year is 4.00. If the sales are expected to increase by 5% next year, how much profit does the company will make next year? A. $ 14,400 В. $ 18,000 С. $ 18,900 D. $ 21,600 Е. None of the above
Transcribed Image Text:13 This year, the company's sales has increased from $200,000 to $240,000 and its profit has increased by $12,000 compared to last year. The Degree of Operating Leverage (DOL) this year is 4.00. If the sales are expected to increase by 5% next year, how much profit does the company will make next year? A. $ 14,400 В. $ 18,000 С. $ 18,900 D. $ 21,600 Е. None of the above
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Degree of Operating Leverage = (% change in operating Income / % change in sales)
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