Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Following is the income statement for Manning Mufflers for the month of June 2024: E: (Click the icon to view the contribution margin income statement.)
Following is the income statement for Manning Mufflers for the month of June 2024: E: (Click the icon to view the contribution margin income statement.) Read the requirements. Requirement 1. Calculate the degree of operating leverage. (Round to four decimal places.) Select the labels and enter the amounts to calculate the degree of operating leverage for Manning Mufflers. Degree of operating leverage Requirement 2. Use the degree of operating leverage calculated in Requirement 1 to estimate the change in operating income total sales increase by 10% (assuming no change in sales price per unit). (Round interim calculations to four decimal places and final answer to the nearest dollar.) The estimated change in operating income will be Requirement 3. Verify your answer in Requirement 2 by preparing a contribution margin income statement with the total sales increase of 10%. Manning Mufflers Contribution Margin Income Statement Month Ended June 30, 2024 Data Table Requirements Net Sales Revenue Variable Costs Contribution Margin Fixed Costs Manning Mufflers Contribution Margin Income Statement Month Ended June 30, 2024 Net Sales Revenue (280 units * $175 per unit) $ Variable Costs (280 units * $50 per unit) Contribution Margin 1. Calculate the degree of operating leverage. (Round to four decimal places.) 2. Use the degree of operating leverage calculated in Requirement 1 to estimate the change in operating income if total sales increase by 10% (assuming no change in sales price per unit). (Round interim calculations four decimal places and final answer to the nearest dollar.) 3. Verify your answer in Requirement 2 by preparing a contribution margin income statement with the total sales increase of 10%. Operating Income 49,000 14,000 35,000 8,500 Fixed Costs Print Done $ 26,500 Operating Income Print Done
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