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2 point CLO-3] if the contribution margin ratlos 0.40, targeted operating Income is 580,000, and targeted sales volume in dol
2 point CLO-3] if the contribution margin ratlos 0.40, targeted operating Income is 580,000, and targeted sales volume in dol
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Answer #1

Ans. Option 8th 2.50 times

*Working Notes:

*Calculation of total contribution margin:

Total contribution margin = Sales * Contribution margin ratio

= $500,000 * 0.40

= $200,000

*Calculation of operating leverage :

Degree of operating leverage = Contribution margin / Targeted operating income

= $200,000 / $80,000

= 2.50 times

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