Question

The February contribution format income statement of XYZ Corporation appears below: Sales $ 169,500 Variable expenses 96,000 Contribution margin 73,500 Fixed expenses 58,000 Net operating income $ 15,500 The degree of operating leverage is closest to:

Answer 1

degree of operating leverage= 4.742

Step-by-step explanation:

Giving the following information:

Contribution margin 73,500

Net operating income $ 15,500

To calculate the degree of operational leverage, we need to use the following formula:

degree of operating leverage= Total contribution margin / operating income

degree of operating leverage= 73,500 / 15,500

degree of operating leverage= 4.742