Morse Company reports total contribution margin of $48,000 and pretax net income of $12,000 for the current month. The degree of operating leverage is:
A) 0.25
B) 250%
C) 2.5
D) 4.0
E) 1.25

Question

Quizplus · Accepted Answer

The degree of operating leverage is calculated as the contribution margin divided by the pretax net income. Here, it is $48,000 / $12,000 = 4.0.

Morse Company Reports Total Contribution Margin of $48,000 and Pretax