Question

Morse Company reports total contribution margin of $48,000 and pretax net income of $12,000 for the current month. The degree of operating leverage is:

Answer 1

Answer:

Degree of operating leverage= 4

Explanation:

Giving the following information:

Total contribution margin= $48,000

Pretax net income= $12,000

To calculate the degree of operating leverage, we need to use the following formula:

degree of operating leverage= Total contribution margin / operating income

degree of operating leverage= 48,000 / 12,000

degree of operating leverage= 4