Assume that the operating results for last year were as follows: Sales $360,000 Less: Variable expenses 144.000 Contribution margin 216,000 Less: Fixed expenses 180.000 Net operating income $ 36,000 a Compute the degree of operating leverage at the current level of sales.

Assume that the operating results for last year were as follows: Sales $360,000 Less: Variable expenses 144.000 Contribution margin 216,000 Less: Fixed expenses 180.000 Net operating income $ 36,000 a Compute the degree of operating leverage at the current level of sales.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 23MC: If a firm has a contribution margin of $78M90 and a net income of $13,700 for the current month,...

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Concept explainers

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

• Assume that the operating results for last year were as follows:
Sales
$360,000
Less: Varlable expenses
144.000
Contribution margin
216.000
Less: Fixed expenses
180.000
Net operating income
$ 36,000
a. Compute the degree of operating leverage at the current level of sales.
Degree of operating leverage

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