The following income statement is provided for Grant, Inc. What is this company's magnitude of operating leverage?
A) 0.33
B) 1.31
C) 2.00
D) 3.00

Name: The following income statement is provided for Grant, Inc. What is this company's magnitude of operating leverage? A) 0.33 B) 1.31 C) 2.00 D) 3.00
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Question

The following income statement is provided for Grant, Inc.  What is this company's magnitude of operating leverage?
A) 0.33 
B) 1.31 
C) 2.00 
D) 3.00

Quizplus · Accepted Answer

Magnitude of operating leverage = Contribution margin ÷ Net income
Magnitude of operating leverage = ($45,000 − $21,000) ÷ $8,000 = 3.00

The Following Income Statement Is Provided for Grant, Inc