Carson Cabana's Inc.has the following information available regarding last year's operations:
$\begin{array}{lc}
\text { Sales} &\$1500000\
\text { Variable costs } &\underline{600000}\
\text {Contribution margin } &900000\
\text { Fixed costs} &\underline{300000\$}\
\text { Net income } &\underline{600000}\
\end{array}$

The company's operating leverage was:

Question

Carson Cabana's Inc.has the following information available regarding last year's operations:
$\begin{array}{lc}
  \text {  Sales} &\$1500000\
 \text { Variable costs } &\underline{600000}\
 \text {Contribution margin  } &900000\
 \text {  Fixed costs} &\underline{300000\$}\
 \text { Net income } &\underline{600000}\
\end{array}$

The company's operating leverage was:

Quizplus · Accepted Answer

Operating leverage is defined as the percentage change in operating income resulting from a certain percentage change in sales. In this case, Carson Cabana's Inc. had a 50% increase in operating income due to a 33% increase in sales. Therefore, the operating leverage is 1.5 (50%/33% = 1.5).

Carson Cabana's Inc The Company's Operating Leverage Was: A) 1

Carson Cabana's Inc The Company's Operating Leverage Was:
A) 1