Sales $900,000

Contribution Margin Ratio 30%

Degree of operating leverage 12

Use the three figures given above for James Co. to determine James' current net income:

		a. $27,000
		b. $22,500
		c. $15,000
		d. $21,000 ** If James' sales increase by $180,000, net income for the company will increase by: (HINT: First, find the percentage increase in sales; then use the Degree of Operating Leverage to solve.)
		a. 20%
		b. 24%
		c. 200%
		d. 240%