Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Elizabeth Ann Kreh is a designer of a custom clothing line and accessories and founder of EAK Company. The following contribution format income statement is
Elizabeth Ann Kreh is a designer of a custom clothing line and accessories and founder of EAK Company. The following contribution format income statement is based on a sales volume of 2,500 custom backpacks, and the relevant range of production is 500 units to 5,000 units): Sales Revenue $375,000 Variable Expenses ( 168,750) Contribution Margin 206,250 Fixed Expenses ( 75,000) Net Operating Income $131,250 60. What is the margin of safety in dollars? 61. What is the degree of operating leverage? 62. Using the degree of operating leverage from #61, what is the estimated percent increase in net operating income of a 6% increase in sales? (Additionally, prepare a worksheet proof). 63. Using the degree of a 9% increase in sales? (Additionally, prepare a worksheet proof)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started