The following is Allison Corporation's contribution format income statement for last month:

The company has no beginning or ending inventories. The company produced and sold 10,000 units last month.
-What is the company's degree of operating leverage?
A)0.2
B)8.0
C)1.7
D)5.0

Question

The following is Allison Corporation's contribution format income statement for last month:

The company has no beginning or ending inventories. The company produced and sold 10,000 units last month.
-What is the company's degree of operating leverage?
A)0.2 
B)8.0 
C)1.7 
D)5.0

Quizplus · Accepted Answer

Degree of operating leverage = Contribution margin F1F1F1S1F1F1F10 Net operating income
= $500,000 F1F1F1S1F1F1F10 $100,000
=5.0

The Following Is Allison Corporation's Contribution Format Income Statement for Last