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The following information relates to MSF Corporation: Sales Revenue Variable Operations costs Contribution Margin $500 000 (10 000 units @ $50/unit) of $200 000 (10 000 @ $20/unit) $300 000 Fixed Cost of Operation $200 000 Operation Income (EBIT) $100 000 Interest Expense $50 000 Earnings before Taxes $50 000 (EBT) What is MSF Corporation's degree of operating leverage (DOL)? A. 1.0 B. 2.0 C. 3.0 D. 4.0

The following information relates to MSF Corporation: Sales Revenue Variable Operations costs Contribution Margin $500 000 (10 000 units @ $50/unit) of $200 000 (10 000 @ $20/unit) $300 000 Fixed Cost of Operation $200 000 Operation Income (EBIT) $100 000 Interest Expense $50 000 Earnings before Taxes $50 000 (EBT) What is MSF Corporation's degree of operating leverage (DOL)? A. 1.0 B. 2.0 C. 3.0 D. 4.0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following information relates to MSF Corporation: Sales Revenue Variable Operations costs Contribution Margin $500 000 (10 000 units @ $50/unit) of $200 000 (10 000 @ $20/unit) $300 000 Fixed Cost of Operation $200 000 Operation Income (EBIT) $100 000 Interest Expense $50 000 Earnings before Taxes $50 000 (EBT) What is MSF Corporation's degree of operating leverage (DOL)? A. 1.0 B. 2.0 C. 3.0 D. 4.0
Transcribed Image Text:The following information relates to MSF Corporation: Sales Revenue Variable Operations costs Contribution Margin $500 000 (10 000 units @ $50/unit) of $200 000 (10 000 @ $20/unit) $300 000 Fixed Cost of Operation $200 000 Operation Income (EBIT) $100 000 Interest Expense $50 000 Earnings before Taxes $50 000 (EBT) What is MSF Corporation's degree of operating leverage (DOL)? A. 1.0 B. 2.0 C. 3.0 D. 4.0
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