BlueTooth Micro Printers Ltd. generates $5 million in profits based on annual sales of $10,872,000. It has a degree of operating leverage of 2.00. What are the expected profits if sales increase to $14,355,000?
a. $8,203,642
b. $3,203,642
c. $18,203,642
d. $11,601,821
e. $1,601,821
% change in sales=(14,355,000-10,872,000)/10,872,000 =32.0364238% Degree of operating leverage=% change in EBIT/% change in sales % ... See the full answer