If sales equal $300,000, variable expenses equal $200,000, and fixed expenses equal $80,000, then the degree...

Question

Question

business accounting

Answer 1

Answer #1

$Degree of Operating Leverage = \frac{Contribution}{Net Income}$

Contribution = Sales - Variable Cost = 300,000 - 200,000 = $100,000

Net Income = Contribution - Fixed Cost = 100,000 - 80,000 = $20,000

$Degree of Operating Leverage = \frac{100,000}{20,000}= 5$

Correct answer is Option (A) 5.00

Answer 2

Similar Homework Help Questions

Help S Sales (3,000 units) Variable expenses Contribution margin Fixed expenses Net operating income $60,000 42,000...

Help S Sales (3,000 units) Variable expenses Contribution margin Fixed expenses Net operating income $60,000 42,000 18,000 13,200 $ 4,800 Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 20% increase in sales is closest to: (Round your intermediate calculations to 1 decimal place.) Multiple Choice 5.33% o 1609 75.00% o 250.00% The magnitude of operating leverage for RBG Corporation is 26 when sales are $180,000 and net income is...
Sales of Blistre Autos are 380,000, variable cost is 200,000, fixed cost is 80,000 tax rate...

Sales of Blistre Autos are 380,000, variable cost is 200,000, fixed cost is 80,000 tax rate is 40%. Calculate the operating leverage of the company. 1.11 times 0.80 times 1.80 times 3.00 times
Serfass Corporation's contribution format income statement for July appears below. Sales Variable expenses Contribution margin Fixed...

Serfass Corporation's contribution format income statement for July appears below. Sales Variable expenses Contribution margin Fixed expenses Net operating income $327,700 180,235 147,465 66,360 $ 81,105 The degree of operating leverage is closest to Multiple Choice

Assume the following information: Per Unit $40 15 Amount $300,000 112,500 187,500 161,000 $ 26,500 Sales...

Assume the following information: Per Unit $40 15 Amount $300,000 112,500 187,500 161,000 $ 26,500 Sales Variable expenses Contribution margin Fixed expenses Net operating income $25 The dollar sales to break-even is: Multiple Choice O O $201,250. $429,333 $257,600. $26,500 < Prev 3 of 10 Next > ILuv $25 vа аме спрекое Contribution margin Fixed expenses Net operating income 187,500 161,000 $ 26,500 The dollar sales to break-even is: Multiple Choice О O $201,250. $429,333 O $257,600. О O $26,500.
Sales Variable expenses $ 26,000 14,000 Contribution margin Fixed expenses 12,000 7,800 $ 4,200 Net operating...

Sales Variable expenses $ 26,000 14,000 Contribution margin Fixed expenses 12,000 7,800 $ 4,200 Net operating income 12 What is the degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage
Serfass Corporation's contribution format income statement for July appears below: Sales $ 307,800 Variable expenses 153,900...

Serfass Corporation's contribution format income statement for July appears below: Sales $ 307,800 Variable expenses 153,900 Contribution margin 153,900 Fixed expenses 40,010 Net operating income $ 113,890 The degree of operating leverage is closest to: Multiple Choice 0.37 0.74 2.00 1.35

Serfass Corporation's contribution format income statement for July appears below: Sales $ 425,500 Variable expenses 234,025...

Serfass Corporation's contribution format income statement for July appears below: Sales $ 425,500 Variable expenses 234,025 Contribution margin 191,475 Fixed expenses 59,360 Net operating income $ 132,115 The degree of operating leverage is closest to: Multiple Choice 0.31 1.45 0.69 2.22
Paxton Corp has provided the following data concerning its operations last month: Sales Variable expenses $400,000...

Paxton Corp has provided the following data concerning its operations last month: Sales Variable expenses $400,000 $250,000 $100,000 Fixed expenses Paxton Corp is a retailing organization, What is the degree of operating leverage (DOL)? Select one: O a. 0.33 O b.3. O c. 5. d. 8
gnment Assume the following information: Per Unit $40 15 Sales Variable expenses Contribution margin Fixed expenses...

gnment Assume the following information: Per Unit $40 15 Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $300,000 112,500 187,500 53,000 $134,500 $25 The dollar sales to attain a target profit of $195,000 is: Multiple Choice $396.800 $329.500. signment The dollar sales to attain a target profit of $195,000 is: Multiple Choice $396,800. $329,500. $661.333. $434,500

Amount Percent of Sales Sales $137,000 100% Variable expenses 54,800 40% Contribution margin 82,200 60% Fixed...

Amount Percent of Sales Sales $137,000 100% Variable expenses 54,800 40% Contribution margin 82,200 60% Fixed expenses 17,700 Net Operating $65,200 1. What is the company’s degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 12% increase in sales. 3. Construct a new contribution format income statement for the company assuming a 12% increase in sales.