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Following is the income statement for Manning Mufflers for the month of June 2018: (Click the icon to view the contribution margin income statement.) Read
Following is the income statement for Manning Mufflers for the month of June 2018: (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 if total sales increase by 30% (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 30%. Manning Mufflers Contribution Margin Income Statement Month Ended June 30, 2018 Net Sales Revenue Variable Costs Requirement 3. Verify your answer in Requirement 2 by preparing a contribution margin income statement with the total sales increase of 30%. Manning Mufflers Contribution Margin Income Statement Month Ended June 30, 2018 Net Sales Revenue Variable Costs Contribution Margin Fixed Costs Operating Income Manning Mufflers Contribution Margin Income Statement Month Ended June 30, 2018 Net Sales Revenue (260 units x $300) $ 78,000 Variable Costs (260 units x $100) 26,000 Contribution Margin 52,000 9,500 Fixed Costs $ 42,500 Operating Income
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