Outback Products reports the following information: $\begin{array}{ll}
\text { Total Contribution Margin } & \$ 32,000 \
\text { Total Fixed Costs } & \$ 28,000
\end{array}$
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

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The Answer of Outback Products reports the following information: $\begin{array}{ll}
\text { Total Contribution Margin } & \$ 32,000 \
\text { Total Fixed Costs } & \$ 28,000
\end{array}$
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?

Outback Products Reports the Following Information Total Contribution Margin $32,000 Total Fixed Costs $28,000\begin{array}{ll}\text { Total Contribution Margin } & \$ 32,000 \\\text { Total Fixed Costs } & \$ 28,000\end{array} Total Contribution Margin Total Fixed Costs ​$32,000$28,000​

Outback Products Reports the Following Information $\begin{array}{ll}\text { Total Contribution Margin } & \$ 32,000 \\\text { Total Fixed Costs } & \$ 28,000\end{array}$