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Compute the degree of operating leverage of new equipment

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Question - Ron'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 $224,100 to $273,900. Net income is expected to be the same at $41,500. Compute the degree of operating leverage before and after the purchase of the new equipment.

Reference no: EM131796431

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