The February contribution format income statement of Mcabier Corporation appears below:
Degree of operating leverage = Contribution margin/Net operating income
= $251,100/$41,300 = 6.08
Percent increase in net operating income
= Percent increase in sales × Degree of operating leverage
= 19% × 6.08 = 115.52%
Sales $211,200
Variable expenses 96,000
Contribution margin 115,200
Fixed expenses 84,100
Net operating income $ 31,100
The degree of operating leverage is closest to:
A) 0.27
B) 6.79
C) 3.70
D) 0.15
