The administrator of Buena Vista Company wants to know the contribution margin and the operational leverage of the company and provides you with the following data.

Assumes sales were 10,000 units:

Determine the contribution margin. Illustrates the computations.

Calculate operational leverage. Illustrates the computations.

Using the degree of operational leverage, determine the effect on net income if sales decrease 10%

	Cantidades por unidad	Cantidades Totales
Precio de venta por unidad (Selling price per unit)	$80.00
Costos fijos (Fixed costs):
Salarios administrativos (Administrative salaries)		$ 180,000
Gasto de renta (Rent expense)		90,000
Gasto de depreciacin (Depreciation expense)		30,000
Total costos fijos (Total fixed costs)		$300,000
Costos variables (Variable costs):
Materia Prima (Raw material)	$ 15.00
Mano de obra ( Direct labor)	22.00
Costos indirectos ( Variable overhead)	11.00
Total costos variables (Total variable costs)	$ 48.00