Jakarta Company is a service fırm with current service revenue of $501,926 and a 48% contribution margin, Its foxed costs are $80,534. Maldives Company has current sales of $4,899,163 and a 55% contribution margin. Its foxed costs an $1,117,394. Compute the degree of operating leverage for Maldives. Round to the nearest hundredth, two decimals.

FINANCIAL ACCOUNTING
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Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question 14
1 pts
Jakarta Company is a service fırm with current service revenue of $501,926 and a 48% contribution margin. Its fixed costs are $80,534. Maldives Company has current sales of $4,899,163 and a 55% contribution margin. Its fixed costs are
$1,117,394.
Compute the degree of operating leverage for Maldives. Round to the nearest hundredth, two decimals.
Transcribed Image Text:Question 14 1 pts Jakarta Company is a service fırm with current service revenue of $501,926 and a 48% contribution margin. Its fixed costs are $80,534. Maldives Company has current sales of $4,899,163 and a 55% contribution margin. Its fixed costs are $1,117,394. Compute the degree of operating leverage for Maldives. Round to the nearest hundredth, two decimals.
Expert Solution
Step 1 Statement showing income statement maldives

Particulars                                     Amount ($)

Revenue                                         4899163

Less: Variable cost 

        ( 1- 55%= 45% 

               4899163x 45% )             ( 2204623)

                                                   ---------------

        Contribution margin               2694540

Less: Fixed Costs                            (1117394)

                                                    --------------

       Operating income                    1577146

                                                    --------------

 

 

 

 

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