Exercise D3-15

Hogue Sports Hut provides individual instruction and coaching to children participating in the city's baseball, softball, basketball, and soccer youth leagues. Last year's results were as follows:

Sales revenue$950,000

Variable expenses646,000

Contribution margin304,000

Fixed expenses182,400

Operating income$121,600

What is Hogue Sports Hut's degree of operating leverage? (Round answer to 2 decimal place, e.g. 13.25.)

Operating leverage

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If Anna Hogue, the company's president, is successful in increasing sales revenue by 8%, by what percent will the company's operating income increase? (Round answer to 2 decimal place, e.g. 13.25%.)

Increase in operating income%

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After achieving the sales increase in part (b), what will be the company's new operating income? (Round answer to 0 decimal places, e.g. 25,000.)

New operating income$

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After achieving the sales increase in part (b), what will be the company's new operating leverage? (Round answer to 2 decimal places, e.g. 0.38.)

New operating leverage