Outback Products reports the following information:
$$\begin{array} { l l }
\text { Total contribution margirl } & \$ 32,000 \
\text { Total fixed costs } & \$ 28,000
\end{array}$$ Required:
a.Calculate Outback Products' degree of operating leverage (DOL).
b.Outback Products forecasts a 6% increase in sales.What is the expected effect in percent on pretax income?

Question

Outback Products reports the following information:
 $$\begin{array} { l l } 
\text { Total contribution margirl } & \$ 32,000 \
\text { Total fixed costs } & \$ 28,000
\end{array}$$ Required:
a.Calculate Outback Products' degree of operating leverage (DOL).
b.Outback Products forecasts a 6% increase in sales.What is the expected effect in percent on pretax income?

Quizplus · Accepted Answer

The Answer of Outback Products reports the following information:
 $$\begin{array} { l l } 
\text { Total contribution margirl } & \$ 32,000 \
\text { Total fixed costs } & \$ 28,000
\end{array}$$ Required:
a.Calculate Outback Products' degree of operating leverage (DOL).
b.Outback Products forecasts a 6% increase in sales.What is the expected effect in percent on pretax income?