Exercise 3-15

Crane Sports Hut provides individual instruction and coaching to children participating in the citys baseball, softball, basketball, and soccer youth leagues. Last years results were as follows:

Sales revenue		$896,970
Variable expenses		648,750
Contribution margin		248,220
Fixed expenses		130,020
Operating income		$118,200

What is Crane Sports Huts degree of operating leverage? (Round answer to 2 decimal place, e.g. 52.75.)

Operating leverage: _______.

If Anna Crane, the companys president, is successful in increasing sales revenue by 5%, by what percent will the companys operating income increase? (Round answer to 2 decimal place, e.g. 52.75%.)

Increase in operating income __________%

After achieving the sales increase in part (b), what will be the companys new operating income? (Round answer to 0 decimal places, e.g. 5,275.)

New operating income $___________.

After achieving the sales increase in part (b), what will be the companys new operating leverage? (Round answer to 2 decimal places, e.g. 52.75.)

New operating leverage __________.