FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
20
Sales
Contribution margin
Fixed costs
(1) Compute the degree of operating leverage (DOL) for each company.
(2) Which company is expected to produce a greater percent increase in income from a 10% increase in sales?
Required 1 Required 2
$ 7,825,600
6,375,600
4,989,600
Complete this question by entering your answers in the tabs below.
Skittles's
DOL
Starburst's
DOL
Compute the degree of operating leverage (DOL) for each company.
Degree of Operating Leverage
$
Contribution margin
$
Numerator:
$ 3,828,000
1,428,000
918,000
Answer is complete but not entirely correct.
6,375,600
1,428,000
I $
1 $
Denominator:
Income
II
2,910,000
=
=
2,836,000 =
Ratio
Degree of Operating Leverage
2.25
0.49
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Transcribed Image Text:20 Sales Contribution margin Fixed costs (1) Compute the degree of operating leverage (DOL) for each company. (2) Which company is expected to produce a greater percent increase in income from a 10% increase in sales? Required 1 Required 2 $ 7,825,600 6,375,600 4,989,600 Complete this question by entering your answers in the tabs below. Skittles's DOL Starburst's DOL Compute the degree of operating leverage (DOL) for each company. Degree of Operating Leverage $ Contribution margin $ Numerator: $ 3,828,000 1,428,000 918,000 Answer is complete but not entirely correct. 6,375,600 1,428,000 I $ 1 $ Denominator: Income II 2,910,000 = = 2,836,000 = Ratio Degree of Operating Leverage 2.25 0.49
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