The January contribution format income statement of Brotherton Corporation appears below: The degree of operating leverage is closest to:

Question

The January contribution format income statement of Brotherton Corporation appears below:  The degree of operating leverage is closest to:

Quizplus · Accepted Answer

Degree of operating leverage (DOL) = Contribution margin / Net operating income

Contribution margin = Sales - Variable expenses = $4,135,000 - $2,803,000 = $1,332,000

Net operating income = $1,050,000

DOL = $1,332,000 / $1,050,000 ≈ 3.64

Therefore, the closest option is D) 3.64.

The January Contribution Format Income Statement of Brotherton Corporation Appears