Adams, inc. has sales of $100,000 with a contribution margin of $60,000 and net income of $20,000. baron, inc. has sales of $110,000 with a contribution margin of $44,000 and net income of $22,000. thus, the degree of operating leverage is for adams, inc. and for

Adams, Inc. has sales of $100,000 with a contribution margin of $60,000 and net income of $20,000. Baron, Inc. has sales of $110,000 with a contribution margin of $44,000 and net income of $22,000. Thus, the degree of operating leverage is ______ for Adams and _____ for Baron Inc.

The degree of operating leverage is 3 for Adams and 2 for Baron Inc.

Degree of operating leverage

Using this formula

Degree of operating leverage=Contribution margin/Net income

Let plug in the formula

Adams Inc.

Degree of operating leverage for adams, inc.= 60,000/20,000

Degree of operating leverage for adams, inc. =3

Baron Inc.

Degree of operating leverage for Baron, inc. =44,000/22,000

Degree of operating leverage for Baron, inc. =2

Therefore the degree of operating leverage is 3 for Adams and 2 for Baron Inc.

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