All categories

1 year ago

Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows.

1 answer:

4 0

Using the degree of operating leverage, the estimated impact on net operating income of a 5 % increase in sales is 6.45%.

The degree of operating leverage (DOL) measures how much a company's operating income varies in response to sales fluctuations.

The DOL ratio assists analysts in determining how changes in sales affect company earnings.

Because a company with high operating leverage has a high proportion of fixed costs, a significant increase in sales can result in significant changes in profits.

If sales increase by 5%, the calculation for increased Net Operating Income is as follows:

Increase in Net Operating Income = Sales Increase x Degree of Operating Leverage

= 5% x 1.29

= 6.45%

Hence, Using the degree of operating leverage, estimated impact on net operating income of a 5 % increase in sales is 6.45%.

Learn more about operating leverage:

brainly.com/question/9212451

#SPJ4

You might be interested in

During the year ended December 31, 2018, Kelly’s Camera Shop had sales revenue of $180,000, of which $90,000 was on credit. At t

storchak [24]

Answer:

(a) On December 10, a customer balance of $1,400 from a prior year was determined to be uncollectible

Dr Sales Returns and Allowances $ 1,400

Cr Accounts Receivable $ 1,400

(b) On December 31, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year.

Dr Bad Debt Expense $ 752

Cr Allowance for Uncollectible Accounts $ 752

Explanation:

Initial Balance

Dr Accounts Receivable $ 12,000

Cr Allowance for Uncollectible Accounts $ 500

Kelly’s Camera Shop had sales revenue, of which $60,000 was on credit

Dr Accounts Receivable $ 60,000

Cr Sales $ 60,000

Collections of accounts receivable during 2018 amounted to $58,000.

Dr Cash $ 58,000

Cr Accounts Receivable $ 58,000

(a) On December 10, a customer balance of $1,400 from a prior year was

determined to be uncollectible, so it was written off.

Dr Allowance for Uncollectible Accounts $ 1,400

Cr Accounts Receivable $ 1,400

(b) On December 31, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year.

Dr Bad Debt Expense $ 752

Cr Allowance for Uncollectible Accounts $ 752

6 0

3 years ago

Cushing Manufacturing assigns overhead based on machine hours. The MillingDepartment logs 1,800 machine hours and Cutting Depart

morpeh [17]

Answer:

Explanation:

The journal entry is shown below:

Milling work in progress A/c Dr $9,000

Cutting work in progress A/c Dr $15,000

To Manufacturing overhead A/c $24,000

(Being overhead allocation is recorded)

The milling work in progress is computed by

= Milling department machine-hours × $ overhead rate

= 1,800 machine hours × $5

= $9,000

And, The cutting work in progress is computed by

= Cutting department machine-hours × $ overhead rate

= 3,000 machine hours × $5

= $15,000

5 0

3 years ago

Who did publisher Henry Luce credit with the provision of “the abundant life” in his blueprint for postwar prosperity, The Ameri

Ratling [72]

Answer:

The correct answer is d. Free enterprise.

Explanation:

Henry Robinson Luce was known as an American publisher and journalist. They gave him the name of "the most influential private citizen in the America of his day". This magnate published what is called “The American Century.” “The American Century” also showed “the vision of America as the dynamic leader of world trade,” and this guy Henry Luce could not have fathomed any economic basis for national leadership besides “free enterprise.”

8 0

3 years ago

Gary is the founder of an animal shelter; he shares a special bond with animals. Hence, he prefers to employ people who care for

Harrizon [31]

Answer:

normative control

Explanation:

Normative control refers to using the values that the employees share as standards instead of using policies to influence the desired behaviors. According to this, the answer is that this is an example of normative control because Gary employs people that share certain values and behaviors and these become the standard to perform their jobs.

4 0

3 years ago

A delivery truck costing $25,000 is expected to have a $1,500 salvage value at the end of its useful life of four years or 125,0

Helga [31]

Answer:

Depreciation expense year 2 Straight line = $5875

Depreciation expense year 2 Double declining = $6250

Depreciation expense year 2 units of activity = $5264

Explanation:

Straight line method is a depreciation method that charges a constant depreciation expense through out the useful life of the asset. Straight line depreciation per year is,

Straight line depreciation = (Cost - Salvage value) / Estimated useful life

Straight line depreciation = (25000 - 1500) / 4 = $5875 per year

Straight line rate = 100% / 4 = 25%

Double declining balance is an accelerated method of depreciation that charges more depreciation in the initial years and less in later years. Double declining balance depreciation is calculated as follows,

Depreciation expense = 2 * Straight line rate * Book value at start of the period

Depreciation expense year 1 = 2 * 0.25 * 25000 = $12500

Book value at start of year 2 = 25000 - 12500 = $12500

Depreciation year 2 = 2 * 0.25 * 12500 = $6250

The units of production method charges depreciation based on the activity for which asset is used as a proportion of the estimated useful life in terms of activity.

Depreciation expense year 2 = (28000 / 125000) * (25000 - 1500)

Depreciation expense year 2 = $5264

7 0

3 years ago