A manufacturer of cedar shingles has supplied the following data: The company's degree of operating leverage is closest to:

Name: A manufacturer of cedar shingles has supplied the following data: The company's degree of operating leverage is closest to:
Brand: Quizplus
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Question

A manufacturer of cedar shingles has supplied the following data:  The company's degree of operating leverage is closest to:

Quizplus · Accepted Answer

Contribution margin = Sales - Variable expenses
= $2, 072, 000 - ($1, 134, 000 + $238, 000)
= $2, 072, 000 - $1, 372, 000 = $700, 000
Degree of operating leverage = Contribution margin ÷ Net operating income
= $700, 000 ÷ $100, 000
= 7.00

A Manufacturer of Cedar Shingles Has Supplied the Following Data