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The Following is the income statement for Jackie Cafe for the month of May 2018. During the month, Jackie Cafe sold 2,000 units (production equals
The Following is the income statement for Jackie Cafe for the month of May 2018. During the month, Jackie Cafe sold 2,000 units (production equals sales), and price per un it is $I 7: Sales Revenue Variable Costs Contribution Margin Fixed Costs Operating Income 34,000 15,000 19,000 15,000 4,000 Requirement 1 (3 points): Calculate the degree of operating leverage Requirement 2 (3 points): Using the degree of operating leverage, estimate the change in Operating income if total sales decrease 20% (assume no change in sales price per unit) Requirement 3 (4 points): Verify your answer in Requirement 2 by preparing a contribution margin income statement with the total sales decrease of 20%
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