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Determine the degree of operating leverage for each approach at current sales levels. For a 10% drop in sales net income would increasedecrease by %
Determine the degree of operating leverage for each approach at current sales levels.
| For a 10% drop in sales net income would increasedecrease by % for Current approach |
| For a 10% drop in sales net income would increasedecrease by % for Automated approach |
| Current Approach | Automated Approach | |||
| Sales | $1,980,000 | $1,980,000 | ||
| Variable costs | 1,584,000 | 1,089,000 | ||
| Contribution margin | 396,000 | 891,000 | ||
| Fixed costs | 297,000 | 712,800 | ||
| Net income | $99,000 | $178,200 |
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Financial Accounting Tools for business decision making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
6th Edition
978-1119191674, 047053477X, 111919167X, 978-0470534779
