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The Yoltar Company manufactures and sells a specinl wireless telephone for environments with a high lovel of electromagnetic redintion. Below is the Statement of Income and Bipenses in contribution margin format for the most recent year: 6. a. Calculate the degree of operating leverage of the company (operating lovenge) for the current level of sales. b. Suppose that, through some effort on the part of the sales department, sales increase by 8% the following year. By what percentage would you expect net operating income to increase? Use the degree of operational leverage to get your answer. c. Verify your answer to the previous question by preparing a new Statement of Income and Expenses in the contribution margin format that shows an 8% increase in sales. 7. As part of an effort to increase company sales and profits, management is considering the use of a higher-quality speaker. This loudspeaker would increase variable costs by \$3 per unit, but management could eliminate a quality inspector who is paid $30,000 per year. The sales manager estimates that the best quality loudspeaker would increase anmual sales by at least 20%. a. Suppose the changes described above are to be carried out. Prepare a Statement of IO sme and Expenses with a contribution format for the following year. It shows the total data, by unit and in percentage. b. Calculate the new breakeven point in units and in sales dollars. c. Would you recommend these changes be made? Explain

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