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Company has a contribution margin of 560,000 and a Net operating Income of $10,000 Ising the degree of operating leverage compute the percentage of increase expected in net operating income if sales is projected to increase by 10%. [10points) Answer: 1. Contribution margin is the excess of revenues over: A. cost of goods sold. B. manufacturing cost. C. all direct costs. D. all variable costs. 2. The difference between total sales in dollars and total variable expenses is called: A net operating income. B. net profit C. the gross margin. D. the contribution margin. 3. Once the break-even point is reached: A. the total contribution margin changes from negative to positive, B. net operating income will increase by the unit contribution margin for each additional item sold. C. variable expenses will remain constant in total. D. the contribution margin ratio begins to decrease. 4. Assuming that the unit sales are unchanged, the total contribution margin will decrease if: A fixed expenses increase. B. fixed expenses decrease. C. variable expense per unit increases. D. variable expense per unit decreases. 5. A contribution approach income statement can usually be easily prepared from the information contained in a corporation's published income statement. TRUE FALSE ... one more page ...one more page

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