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calculate operating leverage if sales are $342,000 variable cost are 58% of sales and operating income is $42,000) a. 4....

calculate operating leverage if sales are $342,000

variable cost are 58% of sales and operating income is $42,000)

a. 4.27
b. 3.42
c. 6.24
d. 5.25

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Answer #1

Contribution margin = Sales - variable cost = 342000 - 342000*58% = $143,640

Operating leverage = Contribution margin / operating income

= $143,640 / 42,000

= 3.42

Option b. is correct answer.

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