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The following income statement applies to Nagano Company for the current year Income Statement Sales revenue (520 units x $44) $22, 880 Variable cost (520
The following income statement applies to Nagano Company for the current year Income Statement Sales revenue (520 units x $44) $22, 880 Variable cost (520 units * $29) (15, 080) Contribution margin 7, 800 Fixed cost (5,400 Net income $2, 400 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Nagano Company will earn if it experiences a 20 percent increase in revenue. The sales price per unit is not affected. c-1. Verify your answer to Requirement b by constructing an income statement based on a 20 percent increase in sales revenue. The sales price is not affected. c-2. Calculate the percentage change in net income for the two income statements Complete this question by entering your answers in the tabs below. Req A and B Req C1 Req C2 Verify your answer to Requirement b by constructing an income statement based on a 20 percent increase in sales revenue. The sales price is not affected. Annual Income Statement Sales revenue S 22,280 Variable cost 15,080 Contribution margin 7,800 Fixed cost 5,400) Net income 2,400 The following income statement applies to Nagano Company for the current years Income Statement Sales revenue (520 units x $44) $22, 880 Variable cost (520 units * $29) (15 , 080) Contribution margin 7 , 800 Fixed cost (5,400) Net income $2, 400 Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Nagano Company will earn if it experiences a 20 percent increase in revenue. The sales price per unit is not affected. c-1. Verify your answer to Requirement b by constructing an income statement based on a 20 percent increase in sales revenue. The sales price is not affected c-2. Calculate the percentage change in net income for the two income statements. Complete this question by entering your answers in the tabs below. Req A and B Req C1 Req C2 Calculate the percentage change in net income for the two income statements Change in net income 85 %
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