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5. Mahoney Corporation has provided its contribution format income statement for April. Sales $201,600 Variable expenses 129,600 Contribution margin 72,000 Fixed expenses 63,600 Net operating

5. Mahoney Corporation has provided its contribution format income statement for April.

Sales

$201,600

Variable expenses

129,600

Contribution margin

72,000

Fixed expenses

63,600

Net operating income

$8,400

Required:

a. Compute the degree of operating leverage.

b. Using the degree of operating leverage, estimate the percentage change in net operating income that

should result from a 9% increase in sales.

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