What is estimated percent increase in net operating income


Problem: Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):

Sales                          $ 35,000

Variable expenses          21,000

Contribution margin       14,000

Fixed expenses                 8,400

Net operating income     $ 5,600

Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $8,400 and the total fixed expenses are $21,000. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in unit sales? (Round your intermediate calculations and final answer to 2 decimal places.)

 

 

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Accounting Basics: What is estimated percent increase in net operating income
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