How to compute the degree of operating leverage

Exercise 6-9 Compute and Use the Degree of Operating Leverage (LO6-8) Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 121,000 48,400 72,600 22,000 $ 50, 600 Percent of Sales 1009 404 604 Required: 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 18% increase in sales. 3. Construct a new contribution format income statement for the company assuming a 18% increase in sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the company's degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverago Required 2 > < Prev 9 of 12 !!! Next >
Exercise 6-9 Compute and Use the Degree of Operating Leverage (L06-8] Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 121,000 48,400 72,600 22,000 $ 50,600 Percent of Sales 100% 40% 604 Required: 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 18% increase in sales. 3. Construct a new contribution format income statement for the company assuming a 18% increase in sales. ces Complete this question by entering your answers in the tabs below. Required 1 Requited 2 Required 3 Using the degree of operating leverage, estimate the impact on net operating income of a 18% increase in sales. (Do not round Intermediate calculations. Round your percentage answer to 2 decimal places (.e 0,1234 should be entered as 12.34).) Not operating income ty < Required 1 Required a > < Prev 9 of 12 III Next >
Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 121,000 48,400 72,600 22,000 $ 50,680 Percent of Sales 100% 404 60% Required: 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 18% increase in sales. 3. Construct a new contribution format income statement for the company assuming a 18% increase in sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Construct a new contribution format income statement for the company assuming a 18% increase in sales. Engberg Company Contribution Income Statement Amount Percent of Sales % % 0 % 0 $ 0 < Required 2 Required: < Prev 9 of 12 ! Next >
Exercise 6A-1 High-Low Method (L06-10) The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number occupancy-days over the last year. An occupancy-day represents a room rented for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer. Month Occupancy-Days Electrical Costs January 3,300 $ 8,024 February 2,960 $ 7,767 March 3,550 $ 8,265 April 1,600 $ 4,800 May 1,370 $ 4,110 June 1,350 $ 4,050 July 3,490 $ 8,117 August 3,750 $ 8,560 September 1,390 $ 4,170 October 1,060 $ 3,180 November 1,520 $ 4,560 December 2,900 $ 7,746 Required: 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element answer to nearest whole dollar amount.) Variable cost of electricity Fixed cost of electricity per occupancy-day per month what the farine intentar la than in parte de fram manth < Prev 12 of 12 18 Next
November December 1,520 2,900 > 4,500 $ 7,746 Required: 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element answer to nearest whole dollar amount.) Variable cost of electricity Fixed cost of electricity per occupancy-day per month 2. What other factors in addition to occupancy-days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Systematic factors like guests, swiching off fans and lights. Number of days present in a month Income taxes paid on hotel income Seasonal factors like winter or summer Fixed salary paid to hotel receptionist. < Prev 12 of 12 !!! Next