Wyatt Oil presently pays no dividend. You anticipate Wyatt Oil will pay an annual dividend of $0.56 per share two years from tod
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Solution
1.Hotel’s cost structure Indications in percentage(%)
Revenue $ 2,000,000 (100)
Less: Variable expenses $ 1,300,000 65
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Contribution margin $700,000
Less: Fixed expenses $560,000 28
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Net income $140,000 7
2.Revenue declines by 30 percent
Revenue $ 1,400,000
Less: Variable expenses $910,000
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Contribution margin $490,000
Less: Fixed expenses $392,000
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Net income $98,000
3.Operating leverage factor when revenue is $2,000,000
Operating leverage = Contribution/ Net income
4.Operating leverage factor when increase in revenue by 25 percent
increase in revenue by 25 percent=
increase in contribution by 25 percent=
increase in net income by 25 percent =
Operating leverage = Contribution/ Net income