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Found in: Page 1129

### Horngren'S Financial And Managerial Accounting

Book edition 6th
Author(s) Tracie L. Miller-Nobles, Brenda L. Mattison
Pages 992 pages
ISBN 9780134486833

# Following is the income statement for Marrow Mufflers for the month of June 2018:MARROW MUFFLERSContribution Margin Income StatementMonth Ended June 30, 2018Net Sales Revenue (140 units _ $250)$ 35,000Variable Costs (140 units _ $50) 7,000Contribution Margin 28,000Fixed Costs 11,500Operating Income$ 16,500Requirements 1. Calculate the degree of operating leverage. (Round to four decimal places.) 2. Use the degree of operating leverage calculated in Requirement 1 to estimate the change in operating income if total sales increase by 40% (assuming no change in sales price per unit). (Round interim calculations to four decimal places and final answer to the nearest dollar.) 3. Verify your answer in Requirement 2 by preparing a contribution margin income statement with the total sales increase of 40%.

1. Degree of operating leverage equals 1.6970
2. Percentage change in operating income equals 68%.