Bucket Corporation had the following income statement: Sales $50,000 Less: Variable costs $28,000 Contribution margin $22,000 Less: Fixed costs $16,000 Net income $6,000 Bucket's operating leverage is a. 0.333 b. 2 c. 3.667 d. 2.333

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 29E
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What is the operating leverage?

Bucket Corporation had the following income statement:
Sales
$50,000
Less: Variable costs $28,000
Contribution margin $22,000
Less: Fixed costs
$16,000
Net income
$6,000
Bucket's operating leverage is
a. 0.333
b. 2
c. 3.667
d. 2.333
Transcribed Image Text:Bucket Corporation had the following income statement: Sales $50,000 Less: Variable costs $28,000 Contribution margin $22,000 Less: Fixed costs $16,000 Net income $6,000 Bucket's operating leverage is a. 0.333 b. 2 c. 3.667 d. 2.333
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