Answer:
1) Operating Leverage Factor = Contribution margin / net income
= $360,000 / $225,000
= 1.6
2 ) % change in Net income = 1.6 *15%
=24%
PROOF
Income Statement 1,800 units 2,070 units
Sales $630,000 $724,500
Variable cost -$270,000 -$310,500
Contribution $360,000 $414,000
Fixed Cost -$135,000 -$135,000
Net Income $225,000 $279,000
change = 279,000 - 225,000 = $54,000
% Change = $54,000 / $225,000
= 0.24 *100 = 24%
Explanation:
1) Income Statement
Sales (1,800 *$350) $630,000
Variable Cost (1,800*$150) -$270,000
Contribution $360,000
Fixed Cost -$135,000
Net Income $225,000
