LO 3.5If a firm has a contribution margin of $78,090 and a net income of $13,700 for the current month, what is their degree of operating leverage?

0.21
1.21
2.4
5.7

The contribution margin characterizes the marginal profit per unit of sales. The indicator is useful in various calculations, and can be used as a measure of operational leverage. As a rule, low values of the indicator are characteristic in labor-intensive sectors, high - in capital-intensive industry.

We have these data:

-contribution margin (CM) : $78,090

-net income (NI) :$13,700

-the degree of operating leverage (DoL) : ?

DoL=CM/NI= 78090/13700=5.7

LO 3.5If a firm has a contribution margin of $78,090 and a net income of $13,700 for the current month, what is their degree of operating leverage? 0.21 1.21 2.4 5.7

Respuesta :

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LO 3.5If a firm has a contribution margin of $78,090 and a net income of $13,700 for the current month, what is their degree of operating leverage?

0.21
1.21
2.4
5.7