Operating Leverage. Last year, Bakely Company had sales of $600,000. Variable costs totalled $400,000, and fixed costs
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Operating Leverage. Last year, Bakely Company had sales of $600,000. Variable costs totalled $400,000, and fixed costs were $150,000 Management projects a 20 percent increase in sales for the current year.
a. Determine the firm's operating leverage based on results from last year.
b. Use the operating leverage determined in part
(a) to calculate projected net income for the current year.
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