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15 February, 05:23

The current sales of Trent, Inc., are $400,000, with a contribution margin of $200,000. The company's degree of operating leverage is 2. If the company anticipates a 30% increase in sales, what is the percentage change in net operating income for Trent, Inc.?

a. 24%

b. 30%

c. 60%

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Answers (1)
  1. 15 February, 06:10
    0
    c. 60%

    Explanation:

    The degree of operating leverage determinates the multiplier effect of an increase in sales given the business is in march and most of the fixed cost are already excluded for the calculations.

    As the sales increase is 30% and the multiplier is 2. The operating income for Mrs. Trent company will increase by 60% they profit margin
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