The July contribution format income statement of Doxtater Corporation appears below: If the company's sales increase by 19%, its net operating income should increase by about: (Round your intermediate calculations to 2 decimal places.)

Question

The July contribution format income statement of Doxtater Corporation appears below:  If the company's sales increase by 19%, its net operating income should increase by about: (Round your intermediate calculations to 2 decimal places.)

Quizplus · Accepted Answer

Degree of operating leverage = Contribution margin ÷ Net operating income
= $251,600 ÷ $57,800 = 4.35
Percentage change in net operating income = Degree of operating leverage × Percentage change in sales
= 4.35 × 19% = 82.71%

The July Contribution Format Income Statement of Doxtater Corporation Appears