Total contribution margin in dollars divided by pretax income is the:
A) Degree of operating leverage.
B) Contribution margin ratio.
C) Margin of safety.
D) Sales mix.
E) Break-even point in units.

Question

Quizplus · Accepted Answer

The degree of operating leverage is calculated by dividing the total contribution margin by the net operating income (or pretax income). This measure indicates how a percentage change in sales volume will affect profits due to fixed costs.

Total Contribution Margin in Dollars Divided by Pretax Income Is