QUESTION 2 The following is Aykroyd Corporation\'s connibution format income sta

Question

QUESTION 2 The following is Aykroyd Corporation's connibution format income statement for last month Sales $4,000 ess variable Contribution margin 1.200,0 ess fixed expenses The company has no beginning or ending inventories A total of 80,000 units were produced and sold last month. (Note that this is the same data provided for the previous question. ) What is the company's degree cr operating leverage? O 0.12 ? 0.4 025 3.3 QUESTION 3 The folowing is Aykroyd Corporation's contribution format income statement for last month Sales Less variable expenses $4,000 Contribution margin 1 1200,000 The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month (Note that this is the same data provided for the previous question.) If saies incease ty 400 unvits, how much should net income increase? $1.800 $6,000 ?$10,000 ?$19,200

Explanation / Answer

2) Degree of operating leverage = (Sales – VC)/(Sales – VC – FC) = Contribution margin/operating income

= 1200,000/480,000

= 2.5

3) Net income increase on 400 units increase = Contribution margin per unit*units increase

= (1200,000/80000) *400

= 6000 $

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