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The magnitude of operating leverage for Forbes Corporation is 3.4 when sales are $260,000 and net income is $30,000. If sales increase by 5%, what is net income expected to be

Respuesta :

Answer:

The expected net income is $35,100

Explanation:

The computation of the net income expected is shown below:

= Net income + (Net income × magnitude of operating leverage × increase in sales percentage)

= $30,000 + ($30,000 × 5% × 3.4)

= $30,000 + $5,100

= $35,100

Hence, the expected net income is $35,100

We simply applied the above formula so that the correct answer could come

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