Which of the following calculations can be used to measure a company's degree of operating leverage?
A) Contribution margin ÷ sales.
B) Contribution margin ÷ income.
C) Sales ÷ contribution margin.
D) Sales ÷ income.
E) Sales ÷ fixed costs.

Question

Quizplus · Accepted Answer

The degree of operating leverage is calculated as the contribution margin divided by the net income. This measures how a percentage change in sales will affect profits.

Which of the Following Calculations Can Be Used to Measure