Stratmore Inc.'s contribution format income statement for August appears below: Sales Variable expenses $300,000 $195,000 Contribution margin $105,000 Fixed expenses $84,000 Net operating income $21,000 The degree of operating leverage is closest to: A) 3.14 B) 2.00 C) 5.00 D) 1.25

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Operating leverage is closest

Stratmore Inc.'s contribution format income statement for August appears
below:
Sales
Variable expenses
$300,000
$195,000
Contribution margin $105,000
Fixed expenses
$84,000
Net operating income $21,000
The degree of operating leverage is closest to:
A) 3.14
B) 2.00
C) 5.00
D) 1.25
Transcribed Image Text:Stratmore Inc.'s contribution format income statement for August appears below: Sales Variable expenses $300,000 $195,000 Contribution margin $105,000 Fixed expenses $84,000 Net operating income $21,000 The degree of operating leverage is closest to: A) 3.14 B) 2.00 C) 5.00 D) 1.25
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education