The current information for the VC Warren Company is shown below:
Sales $500,000
Less variable expenses $175,000
Contribution margin $325,000
Less fixed expenses $90,000
Net operating income $235,000
1. Calculate the contribution margin
2. Calculate the breakeven point. Show the proof in the format above
3. Calculate the operating leverage
4. Using the operating leverage, calculate the projected net income if the sales of $500,000 were to increase by 10%. Show the proof in the format above.
5. Using the operating leverage, calculate the projected net income if the sales of $500,000 were to increase by 20%. Show the proof in the format above.