Question

Remi Corp. reported total sales of $550,000, at a price of $40 and per unit variable expenses of $23, for the sales of their single product. Total Per Unit Sales $550,000 $40 Variable Expenses $316,250 $23 Contribution Margin $233,750 $17 Fixed Expenses $155,000 Net Operating Income $78,750 What is the operating leverage at Remi Corp. (Round off to nearest decimal)

Answer 1

See

Step-by-step explanation:

With regards to the above, operating leverage is calculated by dividing contribution margin with net operating income.

Contribution margin = $233,750

Net operating income = $78,750

Therefore,

Operating leverage = Contribution margin / Operating income

= $233,750 / $78,750

= 2.97