Langin Corporation Has Provided the Following Contribution Format Income Statement

question 185

Essay

Langin Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.
Required:
a. What is the margin of safety percentage?
b. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

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Definitions:

Decision-making Authority

The power or right vested in individuals or groups to make important decisions regarding policies, practices, or procedures within an organization.

Hierarchy

A system or organization in which people or groups are ranked one above the other according to status or authority.

Vertical Division of Labour

The differentiation of job roles based on hierarchical positions within an organization, where tasks are divided according to levels of authority and expertise.

Functional

Related to the natural or intended purpose of something, describing something that is designed to be practical and useful rather than merely attractive.