Respuesta :
Answer:
2.4 and 12%
Explanation:
We have these data:
-contribution margin(CM): $58,560
-net income (NI) :$24,400
-expected sales increase (ESI): 5%
-the degree of operating leverage (DoL) : ?
-expected percent change in income(ECI): ?
DoL=CM/NI= 58560/24400= 2.4
The change in sales will have effect on the contribution margin, revenues and etc. But we have summarized formula to find the expected change on net income:
ECI= ESI* DoL= 5* 2.4= 12%
The expected net income increase will be 12 %
Leverage is the change in one variable in accordance with another. The operating leverage is the cost accounting formula that is used to measure the translation of revenue growth in the operating income.
The correct option is:
2.4 is the degree of operating leverage and 12% is the percentage of change in income.
Given,
contribution margin(CM): $58,560
net income (NI) :$24,400
expected sales increase (ESI): 5%
The degree of operating leverage is computed as follows:
[tex]\text{Degree of Operating Leverage}=\dfrac{\text{Contribution Margin}}{\text{Net Income}}\\\\=\dfrac{\$58,560}{\$24,400}\\\\=2.4\;\text{times}[/tex]
The expected percentage change in the income is computed as follows:
[tex]\text{Expected Change in Income}=\text{Expected Sales Volume}\times\text{Degree of Operating Leverage}\\\\=5\%\times2.4\;\text{times}\\\\=12\%[/tex]
To know more about leverage, refer to the link:
https://brainly.com/question/13056805
