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:

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:

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