Question

Based on the following operating data, the operating leverage is (Round your answer to 2 decimal places): Sales Variable costs Contribution margin Fixed costs Income from operations $750,000 389,000 361,000 139,000 $222,000 Multiple Choice 163 2.08 108 3.38

Answer 1

Solution:

Operating Leverage = Contribution Margin / Net Operating Income

Here,in the given data,

Contribution margin = $361,000

Net Operating Income (i.e income from operations) = $222,000

Therefore,

Operating Leverage = $361,000 / $222,000

= 1.63