Turner Company's contribution margin ratio is 15%.If the degree of operating leverage is 12 at the $150,000 sales level,net operating income at the $150,000 sales level must equal:

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Quizplus · Accepted Answer

CM ratio = 0.15
Degree of operating leverage = 12
Sales = $150,000
CM ratio = Contribution margin F1F1F1S1F1F1F10 Sales
Contribution margin = CM ratio F1F1F1S1F1F1F10 Sales = 0.15 F1F1F1S1F1F1F10 $150,000 = $22,500
Degree of operating leverage = Contribution margin F1F1F1S1F1F1F10 Net operating income
12 = $22,500 F1F1F1S1F1F1F10 Net operating income
Net operating income = $22,500 F1F1F1S1F1F1F10 12 = $1,875

Turner Company's Contribution Margin Ratio Is 15