Magazine Inc.had the following income statement for the current year: $$\begin{array} { l r }
\text { Sales } & \$ 50,000 \
\text { Variable expenses } & 30,000 \
\text { Contribution margin } & \$ 20,000 \
\text { Fixed expenses } & 8,000 \
\text { Operating income } & \$ 12,000
\end{array}$$ Required: A. $\quad$Calculate the operating leverage ratio.
B. $\quad$If sales increase by 40 percent, what will be the percentage change in income?
C. $\quad$If sales decrease by 10 percent how much will income decrease?

Question

Magazine Inc.had the following income statement for the current year: $$\begin{array} { l r } 
\text { Sales } & \$ 50,000 \
\text { Variable expenses } & 30,000 \
\text { Contribution margin } & \$ 20,000 \
\text { Fixed expenses } & 8,000 \
\text { Operating income } & \$ 12,000
\end{array}$$ Required: A. $\quad$Calculate the operating leverage ratio.
B. $\quad$If sales increase by 40 percent, what will be the percentage change in income?
C. $\quad$If sales decrease by 10 percent how much will income decrease?

Quizplus · Accepted Answer

The Answer of Magazine Inc.had the following income statement for the current year: $$\begin{array} { l r } 
\text { Sales } & \$ 50,000 \
\text { Variable expenses } & 30,000 \
\text { Contribution margin } & \$ 20,000 \
\text { Fixed expenses } & 8,000 \
\text { Operating income } & \$ 12,000
\end{array}$$ Required: A. $\quad$Calculate the operating leverage ratio.
B. $\quad$If sales increase by 40 percent, what will be the percentage change in income?
C. $\quad$If sales decrease by 10 percent how much will income decrease?

Magazine Inc Required: A \quad Calculate the Operating Leverage Ratio \quad If Sales Increase by 40 Percent, What Will Be the \begin{array}

Magazine Inc Required: A $\quad$ Calculate the Operating Leverage Ratio $\quad$ If Sales Increase by 40 Percent, What Will Be the \begin{array}