Solution-Compute the degree of operating leverage

Compute the degree of operating leverage

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Reference no: EM13554660

John's Shingle Corporation is considering the purchase of a new automated shingle-cutting machine. The new machine will reduce variable labor costs but will increase depreciation expense. Contribution margin is expected to increase from $160,000 to $240,000. Net income is expected to be the same at $40,000. Compute the degree of operating leverage before and after the purchase of the new equipment. Interpret your results.

Reference no: EM13554660

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Compute the degree of operating leverage

Reference no: EM13554660

Reference no: EM13554660

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