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  3. reise 7-48 margin of safety and operating leverage

reise 7-48 Margin of Safety and Operating Leverage ina Company produces a single product. The...

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Accounting

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reise 7-48 Margin of Safety and Operating Leverage ina Company produces a single product. The projected income statement for the coming OBJE year is as follows: Sales (40,000 units @ $45) Total variable cost Contribution margin Total fixed cost Operating income $1,800,000 1,044,000 $ 756,000 733,320 $ 22,680 (Note: Round all dollar answers to the nearest dollar. Round contribution margin ratio and degree of operating leverage to two decimal places.) Required: 1. Compute the break-even sales dollars. 2. Compute the margin of safety in sales dollars. 3. Compute the degree of operating leverage. (Note: Round answer to two decimal places.) 4. Compute the new operating income if sales are 20% higher than expected. (Note: Round answer to the nearest dollar.)

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