Question
Hello! Operating leverage: Mary Rzeznik sells gourmet chocolate chip cookies. The results of her last month of operations are as follows: Sales Revenue $58,000 Cost
Hello!
Operating leverage: Mary Rzeznik sells gourmet chocolate chip cookies. The results of her last month of operations are as follows:
| Sales Revenue | $58,000 |
| Cost of goods sold (all variable) | $32,000 |
| Gross margin | $26,000 |
| Selling expenses (70% variable) | $8,000 |
| Administrative expenses (20% variable) | $12,000 |
| Operating income | $6,000 |
A: What is Mary's degree of operating leverage?
B: If Mary Rzeznik can increase sales by 15%, by what dollar amount will her operating income increase?
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Financial Reporting And Analysis
Authors: Lawrence Revsine, Daniel Collins
4th Edition
0073527092, 978-0073527093
