Compute the degree of operating leverage before the purchase

Reference no: EM131973973

Problem

Sam'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 $243, 650 to $305, 670. Net income is expected to be the same at $44, 300. Compute the degree of operating leverage before and after the purchase of the new equipment.

Reference no: EM131973973

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