In the Most Recent Month, Shoemaker Corporation's Total Contribution Margin

question 40

Essay

In the most recent month, Shoemaker Corporation's total contribution margin was $29,600 and its net operating income $3,000.
Required:
a. Compute the degree of operating leverage to two decimal places.
b. Using the degree of operating leverage, estimate the percentage change in net operating income that should result from a 10% increase in sales.

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Definitions:

Panic Disorder

An anxiety disorder marked by recurrent and unpredictable panic attacks.

Relaxation Training

A treatment procedure that teaches clients to relax at will so they can calm themselves in stressful situations.

Fear Hierarchy

A list of objects or situations that frighten a person, starting with those that are slightly feared and ending with those that are feared greatly; used in systematic desensitization.

Anxiety

A feeling of worry, nervousness, or unease about something with an uncertain outcome.