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Carver Packing Company reports total contribution margin of $72,000 and pretax net income of $24,000 for the current month. In the next month, the company expects sales volume to increase by 8%. The degree of operating leverage and the expected percent change in income, respectively, are:

Respuesta :

Answer:

Degree of operating leverage = 3

Percent change in income  = 24%

Explanation:

Data provided in the question:

Total contribution margin = $72,000

Pretax net income = $24,000

Expected increase in sales volume = 8%

Now,

Degree of operating leverage = contribution margin ÷ Net operating income

= $72,000 ÷ $24,000

= 3

Percent change in income

= Percent  increase in sales × Degree of operating leverage

= 8% × 3

= 24%

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