Currentsystemexpectedcost 13000000011300000

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Unformatted text preview: =$4,500 TheDegreeofOperatingLeverage(Opt2) = $4,500÷$4,500=1.00  5. Thecalculationsinrequirement4indicatethat,whensalesare150units,a percentage change in sales and contribution margin will result in 1.24 times that percentage change in operating income for Option 1, but the same percentage change in operating income for Option 2. The degree of operating leverage at a givenlevelofsaleshelpsmanagerscalculatetheeffectoffluctuationsinsaleson operatingincomes.  3 ­‑24 (15min.)Grossmarginandcontributionmargin,makingdecisions.  1. Revenues Deductvariablecosts:  Costofgoodssold  Salescommissions  Otheroperatingcosts Contributionmargin  $800,000 $384,000 96,000 32,000  512,000 $288,000  2.  3. Contributionmarginpercentage= $288,000 = 36.00%  $800,000 Incrementalreven...
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This document was uploaded on 02/04/2014.

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