The Following is the income statement for Jackie Cafe for the month of May 2019. During...

 

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The Following is the income statement for Jackie Cafe for the month of May 2019. During the month, Jackie Cafe sold 2,000 units (production equals sales), and price per unit is $17: Sales Revenue 34,000 Variable Costs 15,000 Contribution Margin 19,000 Fixed Costs 15.000 Operating Income 4,000 Requirement 1 (3 points): Calculate the degree of operating leverage Requirement 2 (3 points): Using the degree of operating leverage, estimate the change in operating income if total sales decrease 20% (assume no change in sales price per unit) Requirement 3 (4 points): Verify your answer in Requirement 2 by preparing a contribution margin income statement with the total sales decrease of 20%. The Following is the income statement for Jackie Cafe for the month of May 2019. During the month, Jackie Cafe sold 2,000 units (production equals sales), and price per unit is $17: Sales Revenue 34,000 Variable Costs 15,000 Contribution Margin 19,000 Fixed Costs 15.000 Operating Income 4,000 Requirement 1 (3 points): Calculate the degree of operating leverage Requirement 2 (3 points): Using the degree of operating leverage, estimate the change in operating income if total sales decrease 20% (assume no change in sales price per unit) Requirement 3 (4 points): Verify your answer in Requirement 2 by preparing a contribution margin income statement with the total sales decrease of 20%.

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