Answer:
* The company’s degree of operating leverage: 1.38;
* The impact on net operating income of a 22% increase in sales: it will increase by 30.4%;
* New contribution format income statement:
Engberg Company
Contribution format income statement
Amount Percentage of sales
Sales $176,900 100%
Variable expenses 70,760 40%
Contribution margin 106,140 60%
Fixed expenses 24,000
Net operating income 82,140
Explanation:
* The company’s degree of operating leverage = Contribution / profit = 87,000/63,000 = 1.38
* The impact on net operating income of a 22% increase in sales is calculated as: Degree of operating leverage x % changes in sales revenue = 1.38 x 22% = 30.4%.
* new contribution format income statement is shown in the answer part.
Answer:
The Short Run Aggregate Supply Curve Shifts to the Right.
Explanation:
The short run aggregate supply curve shifts to the right because prices increase, and increased prices results in increased supply. However, increased prices drives down demand.
Answer: 3 million.
Explanation:
Unemployment is defined as when a member of a Country's labor force is jobless but actively looking for work.
In the Scenario 28-1, the discouraged people are not counted as they are discouraged and not looking for work and 1 million other people being students and retirees amongst others are not looking for work either.
The unemployed section of Mankiwland is therefore the 3 million unemployed people.
The effect of repurchasing stock using the cost method is to Increase Treasury Stock, Decrease stockholders' equity ,Decrease Assets.
<h3><u>
What is Cost Method?</u></h3>
- Certain investments are recorded using the cost method of accounting in a company's financial statements.
- When an investor holds an investment that it has little or no control over—typically described as owning less than 20% of the company—they employ this strategy. On the balance sheet, the investment is listed as an asset at its historical cost.
- The investor lists the investment's cost as an asset. Dividend income is recorded as income when it is received and appears on the income statement.
- Depending on the investor's accounting principles, the receipt of a dividend also boosts the cash flow, either in the investing portion or the operational area of the cash flow statement.
Treasury stock, commonly referred to as treasury shares or reacquired stock, describes previously outstanding stock that the issuing corporation purchases back from stockholders. The effect of repurchasing stock using the cost method increases treasury stock.
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