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tealtoad562Lv1
28 Sep 2019
X Company currently has net earnings of $1,000 and a degree ofoperating leverage of 5, A 10% increase in sales should result in aSelect one: a. 50% increase in net earnings. b. 5% increase in netearnings. c. $50 increase in net earnings. d. $100 increase in netearnings.
X Company currently has net earnings of $1,000 and a degree ofoperating leverage of 5, A 10% increase in sales should result in aSelect one: a. 50% increase in net earnings. b. 5% increase in netearnings. c. $50 increase in net earnings. d. $100 increase in netearnings.
Lelia LubowitzLv2
28 Sep 2019
Related questions
Bic Corporation's contribution format income statement for themost recent month follows:
| Sales | $121,000 |
| Variable Expenses | 60,500 |
| Contributon Margin | 60,500 |
| Fixed Expenses | 43,700 |
| Net Operating Income | $16,800 |
Required:
a. Compute the degree of operating leverage to two decimalplaces.
b. Using the degree of operating leverage, estimate thepercentage change in net operating income that should result froman 8% increase in sales. Prove your answer by preparing a newcontribution format income statement, showing the new net operatingincome after the increase in sales.
