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F-' Calculate the degree of operating leverage. Assume that sales will increase by 20% in 2015. Calculate the percentage of before-tax income for this increase.
F-"' Calculate the degree of operating leverage. Assume that sales will increase by 20% in 2015. Calculate the percentage of before-tax income for this increase. Provide calculations to prove that your percentage increase is correct based on the operating leverage calculated in step 5- Compute the number of umbrellas that Hampshire is required to sell if it plans to earn $15, in income before taxes by using the target income formula. Proof your calculation. A company that specializes in tours in England has offered to purchase 5.030 umbrellas at $11 each from Hampshire. The variable selling cosls of 'd'rese additional units will be $1.32! as opposed to $1.10 per unit. Also, mis production activity will incur another $15,611! of xed administrative costs. Should Hampshire agree to sell these additional 5,013 umbrellas to the touring business? Provide calculations to support your decision
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