Answer:
1) The company’s degree of operating leverage (DOL) for 2017 was 3.00
2) The company’s pretax income would be $138,600 if sales decrease by 4%
3) Please relate to the MS excel sheet attached to this answer
Explanation:
Hi, well, first we need to present the equation to find the "degree of operating leverage" (DOL)
Therefore:
So, the answer to question 1 is: DOL = 3.00
Now, if sales decrease by 4%, that means that the units sold would be 10,500*(1-0.04)=10,080, therefore the pretax income would be:
So, the answer for question 2) is Pretax Income = $138,600
For question 3, please relate to the excel sheet attached to this document.
Best of luck.