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The following information relates to Paternus Company: Sales revenue$10,000,000 Contribution margin 4,000,000 Net Income 1,000,000 If a manager at Paternus desired to determine the percentage impact on
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The following information relates to Paternus Company: Sales revenue$10,000,000 Contribution margin 4,000,000 Net Income 1,000,000 If a manager at Paternus desired to determine the percentage impact on income of a given percentage change in sales, the manager would multiply the percentage increase/decrease in sales revenue by:

User BrianP
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11 votes

Answer:

4.0

Step-by-step explanation:

Degree of operating leverage = Contribution Margin / Income

Degree of operating leverage = 4000,000/1000,000

Degree of operating leverage = 4 times

If the sales are Increased by the X% then the income will be increased by the 4.0*X%.

User LDJ
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