If sales are $300,000,variable costs are 60% of sales,and operating income is $40,000,what is the operating leverage?

Name: If sales are $300,000,variable costs are 60% of sales,and operating income is $40,000,what is the operating leverage?
Brand: Quizplus
Rating: 4.8 (43 reviews)

Question

Quizplus · Accepted Answer

Operating leverage is calculated as Contribution Margin / Operating Income. Contribution Margin is Sales minus Variable Costs. Here, Contribution Margin = $300,000 - (60% of $300,000) = $120,000. Operating Leverage = $120,000 / $40,000 = 3.000.

If Sales Are $300,000,variable Costs Are 60% of Sales,and Operating