Lagasca Corporation's contribution format income statement for December appears below: The degree of operating leverage is closest to:

Question

Lagasca Corporation's contribution format income statement for December appears below:  The degree of operating leverage is closest to:

Quizplus · Accepted Answer

Degree of operating leverage (DOL) = Contribution Margin/Operating Income
From the given statement, Contribution Margin for the month of December = $78,000 and Operating Income = $15,600
Therefore, DOL = $78,000/$15,600 = 5
However, the question asks for the closest option, and option C (4.69) is the closest to 5. Thus, the answer is C.

Lagasca Corporation's Contribution Format Income Statement for December Appears Below