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Homework answers / question archive / Blossom Manufacturing Company has the following projected income statement for the next fiscal period based on sales of 90,000 units

Blossom Manufacturing Company has the following projected income statement for the next fiscal period based on sales of 90,000 units

Accounting

Blossom Manufacturing Company has the following projected income statement for the next fiscal period based on sales of 90,000 units.

Sales- $8820000

Variable costs- 6615000

Contribution margin -2205000

Fixed costs- 1100000

Net operating income -$1105000

Blossom's degree of operating leverage is

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Degree of operating leverage= Contribution margin/ Net operating income

Given,

Contribution margin= 2205000

Net operating income= 1105000 

 

Put the values in the formula;

=  2205000/ 1105000 

= 1.995 or 2.00 (rounded off)

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