Determine how much should operating income increase

Assignment Help Managerial Accounting

Reference no: EM132706802

Assume that the operating results for last year were as follows:

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $800,000

Variable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,000

Contribution margin . . . . . . . . . . . . . . . . . . . . . . . . . 570,000

Fixed expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310,000

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 260,000

Problem 1: Compute the degree of operating leverage at the current level of sales.

Problem 2: The president expects sales to increase by 12% next year. By how much should operating income increase?

Reference no: EM132706802

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