Based on the following operating data, the operating leverage is: $$\begin{array} { l r }
\text { Sales } & \$ 500,000 \
\text { Variable costs } & 280,000 \
\text { Contribution margin } & 220,000 \
\text { Fixed costs } & 180,000 \
\text { Income from operations } & \$ 40,000
\end{array}$$
A) 0.18
B) 5.50
C) 1.22
D) 12.5

Question

Based on the following operating data, the operating leverage is: $$\begin{array} { l r } 
\text { Sales } & \$ 500,000 \
\text { Variable costs } &  280,000 \
 \text { Contribution margin } &  220,000 \
 \text { Fixed costs } & 180,000 \
 \text { Income from operations } & \$  40,000
\end{array}$$
A) 0.18
B) 5.50
C) 1.22
D) 12.5

Quizplus · Accepted Answer

Operating leverage is calculated as Contribution Margin divided by Income from Operations, which is 220,000 / 40,000 = 5.50.

Based on the Following Operating Data, the Operating Leverage Is