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Calculate the percentage increase in operating income

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Question - Joe Corporation sold 2,000 units last month. Here is their income statement for that period:

Total

Sales $100,000

Less: Variable Expenses 55,000

Contribution Margin $45,000

Less: Fixed Expenses 20,000

Operating Income $25,000

Required -

1. Calculate the company's degree of operating leverage.

2. Using the degree of operating leverage calculated in part 1, calculate the percentage increase in operating income if the sales increase to 2,400 units.

Reference no: EM133184448

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