Question
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):
Sales $ 24,200
Variable expenses 13,400
Contribution margin 10,800
Fixed expenses 7,668
Net operating income $ 3,132
1. What is the degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating level______? 2. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 3% increase in sales? Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e .1234 should be entered as 12.34). Increase in net operating income______%? 3.Assume that the amounts of the companys total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $7,668 and the total fixed expenses are $13,400. Under this scenario and assuming that total sales remain the same, what is the degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage_____? |
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