If the company's sales increase by 19%, its net operating income should increase by about:

A) 10%
B) 19%
C) 83%
D) 186%

Question

If the company's sales increase by 19%, its net operating income should increase by about:A) 10%B) 19%C) 83%D) 186%

Abbey Moore · Accepted Answer

Final Answer : C, Explanation :  Degree of operating leverage = Contribution margin ÷ Net operating income= $251,600 ÷ $57,800 = 4.35Percentage change in net operating income = Degree of operating leverage × Percentage change in sales= 4.35 × 19% = 82.71%Reference: CHO6-Ref35Dietrick Corporation produces and sells two products.Data concerning those products for the most recent month appear below:   Fixed expenses for the entire company were $42,550.

If the company's sales increase by 19%, its net operating income should increase by about:

A) 10%
B) 19%
C) 83%
D) 186%

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Learning Objectives

Learning Objectives

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