Homework Answers
Answer: 1st option
Contribution margin and net operating income should be calculated first.
Contribution margin = Sales revenue – Total variable cost
= $150,000 – (Cost of goods sold + sales commission)
= $150,000 – (75,000 + 5,000)
= $150,000 - $80,000
= $70,000
Net operating income (known as, earnings before interest and taxes but after depreciation and commission) = $61,000 given
Operating leverage = Contribution margin / Net operating income
= $70,000 / $61,000
= 1.1475…..
= 1.15 rounded
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