The following is last month's contribution format income statement:
What is the company's degree of operating leverage?

Question

The following is last month's contribution format income statement: 
What is the company's degree of operating leverage?

Quizplus · Accepted Answer

Degree of Operating Leverage (DOL) = Contribution Margin / Operating Income
From the given income statement, Contribution Margin = $515,000 and Operating Income = $205,000
Therefore, DOL = $515,000 / $205,000 = 2.51 rounded to 3.0. Thus, the correct answer is C.

The Following Is Last Month's Contribution Format Income Statement