SOLUTION: The magnitude of operating leverage for Franklin Corporation is 2.8 when sales are $200,000 and net income is $24,000. If sales increase by 5%, what is net income expected to be?

SOLUTION: The magnitude of operating leverage for Franklin Corporation is 2.8 when sales are $200,000 and net income is $24,000. If sales increase by 5%, what is net income expected to be?

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Question 1109012: The magnitude of operating leverage for Franklin Corporation is 2.8 when sales are $200,000 and net income is $24,000. If sales increase by 5%, what is net income expected to be?
Answer by Boreal(15235) (Show Source): You can put this solution on YOUR website!
The net income will increase by 5% or 24000*0.05 or $1200
One can also say sales will increase $10000 to 210000 and net income is 12% of sales or $25,200, an increase of $1200.
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