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Social ScienceOperating LeverageHaywood Co. reports the following data:Sales$6,160,000Variable costs(4,620,000)Contribution margin$1,540,000Fixed costs(440,000)Operating income$1,100,000Determine Haywood Co.’s operating leverage. Round your answer to one decimal place.
Operating Leverage
Haywood Co. reports the following data:
| Sales | $6,160,000 |
| Variable costs | (4,620,000) |
| Contribution margin | $1,540,000 |
| Fixed costs | (440,000) |
| Operating income | $1,100,000 |
Determine Haywood Co.’s operating leverage. Round your answer to one decimal place.
Expert Answer
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Degree of Operating Leverage (DOL): The degree of operating leverage is evaluated by dividing the total contribution margin by the operating income of the company Use the following formula to calculate the degree of operating leverage: Total contribution margin DOL Operating income
Determine the operating levera...
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Total contribution margin Operating income Operating leverage $1,540,000 S1,100, 000 =1.4
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