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Compute the degree of operating leverage

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Reference no: EM132556347

Question - Assume that the operating results for last year were:

Sales $400,000

Less variable expenses 160,000

Contribution margin 240,000

Less fixed expenses 180,000

Net income $60,000

Required -

a. Compute the degree of operating leverage at the current level of sales.

b. The president expects sales to increase by 20% next year. By what percentage should net income increase?

Reference no: EM132556347

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