Superior Door Company sells prehung doors to home builders. The doors are sold f

Question

Superior Door Company sells prehung doors to home builders. The doors are sold for $64 each. Variable costs are $44 per door, and fixed costs total $957,000 per year. The company is currently selling 52,200 doors per year.

Prepare a contribution format income statement for the company at the present level of sales. (Input all amounts as positive values except losses which should be indicated by a minus sign.)

Management is confident that the company can sell 67,338 doors next year (an increase of 15,138, or 29%, over current sales).

Compute the expected percentage increase in net operating income for next year.

Compute the expected net operating income for next year. (Do not prepare an income statement; use the degree of operating leverage to compute your answer.)

Superior Door Company sells prehung doors to home builders. The doors are sold for $64 each. Variable costs are $44 per door, and fixed costs total $957,000 per year. The company is currently selling 52,200 doors per year.

Explanation / Answer

total expected NOI =current profit + current profit *348%

=87000+302760

=$389760

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