Kappen Corporation's contribution format income statement for October appears below:
The degree of operating leverage is closest to:

Question

Kappen Corporation's contribution format income statement for October appears below: 
The degree of operating leverage is closest to:

Quizplus · Accepted Answer

Degree of operating leverage = Contribution margin ÷ Operating income
Contribution margin = Sales - Variable expenses = $387,000 - $240,000 = $147,000
Operating income = $28,000
Degree of operating leverage = $147,000 ÷ $28,000 = 5.25
The closest option is 3.63.

Kappen Corporation's Contribution Format Income Statement for October Appears Below