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Essex Company manufactures and sells motorbikes. The company's contribution format income statement for the most recent year is given below: Total Per Unit Percentage Sales
Essex Company manufactures and sells motorbikes. The company's contribution format income statement for the most recent year is given below: Total Per Unit Percentage Sales (15000 units) 750,000 50 100% Variable Expense 600,000 40 ? Contribution Margin 150,000 10 ? Fixed Expense 90,000 Net Operating Income 60,000 Management is anxious to increase the company's profit and has asked for an analysis of a number of items. Instructions: a. Compute the company's break-even point in both units and sales dollars. b. Compute the company's Operating Leverage c. Assume that sales increase by $500,000 next year. If cost behavior patterns remain unchanged, by how much will the company's net operating income increase
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