What is Nancy’s degree of operating leverage? Nancy Daniel sells gourmet chocolate chip cookies. The results of her last month of operations are as follows:Sales revenue$49,500Cost of goods sold (all variable)24,500Gross margin25,000Selling expenses (70% variable)8,000Administrative expenses (20% variable)12,000Operating income$5,000

Formula used: Degree of operating leverage = contribution margin / Operating income

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What is Nancy’s degree of operating leverage?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 27E: Alard Manufacturing Company has a billing department staffed by four billing clerks. Each clerk is...

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