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Carver Packing Company reports total contribution margin of $94,000 and pretax net income of $23,500 for the current month. In the next month, the company expects sales volume to increase by 5%. The degree of operating leverage and the expected percent change in income, respectively, are:\

Sagot :

bharathparasad577

The degree of operating leverage is 4 and the expected percentage change in income is 20%.

Contribution margin = $94,000

Pretax net income = $23,500

Degree of operating leverage = Total Contribution margin / pretax Net income

= 94,000/23,500

= 4

Increase in sales = 5%

Increase in income = Increase in sales volume x Degree of operating leverage

= 5 x 4

= 20%

Due to 5% increase in sales, income will increase by 20%.

Thus this is the answer about the degree of operating leverage and Percent change in income in a month.

To learn more about Operating leverage, refer: https://brainly.com/question/24278932

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