Question

4. ABC Company has the following contribution format income statement: Sales $364,500 Variable Expenses $112,000 Contribution Margin $252,500 Fixed Expenses $194,100 Net Operating Income $58,400 The degree of operating leverage is closest to: a. 6.24 b. 0.68 c. 0.17 d. 4.32

Answer 1

Correct answer--------------(d) 4.32

Working

A	Sales	$     364,500.00
B	Variable expenses	$     112,000.00
C=A-B	Contribution margin	$     252,500.00
D	Fixed Expenses	$     194,100.00
E=C-D	Net Operating Income	$       58,400.00
F=C/E	Degree of operating Leverage	4.32