Question

4. ABC Company has the following contribution format income statement: Sales $364,500 Variable Expenses $112,000 Contribution...

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

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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
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