Place Corporation had the following income statement for the current year:
$\begin{array}{lr}
\text { Sales } & \$ 25,000 \
\text { Variable expenses } & 15,000 \
\text { Contribution margin } & \$ 10,000 \
\text { Fixed expenses } & \$ 4,000 \
\text { Operating income } & \$ 6,000
\end{array}$
a.Calculate the operating leverage ratio.
b.If sales increase by 20 percent,what will be the percentage change in income?
c.If sales increase by $15,000,how much will income increase?

Question

Place Corporation had the following income statement for the current year:
 $\begin{array}{lr}
\text { Sales } & \$ 25,000 \
\text { Variable expenses } & 15,000 \
\text { Contribution margin } & \$ 10,000 \
\text { Fixed expenses } & \$ 4,000 \
\text { Operating income } & \$ 6,000
\end{array}$ 
a.Calculate the operating leverage ratio.
b.If sales increase by 20 percent,what will be the percentage change in income?
c.If sales increase by $15,000,how much will income increase?

Quizplus · Accepted Answer

The Answer of Place Corporation had the following income statement for the current year:
 $\begin{array}{lr}
\text { Sales } & \$ 25,000 \
\text { Variable expenses } & 15,000 \
\text { Contribution margin } & \$ 10,000 \
\text { Fixed expenses } & \$ 4,000 \
\text { Operating income } & \$ 6,000
\end{array}$ 
a.Calculate the operating leverage ratio.
b.If sales increase by 20 percent,what will be the percentage change in income?
c.If sales increase by $15,000,how much will income increase?

Place Corporation Had the Following Income Statement for the Current