Chapter 16, Problem 15ICA

Please provide the solution to this financial accounting question using proper accounting principles

Richard Gear Co. manufactures mountain bike tires. The tires sell for $75. The variable cost per tire is $40, and monthly fixed costs are $360,000. If the company is currently selling 18,000 tires monthly, what is the degree of operating leverage?

At the beginning of the year, managers at Kronos Corp. estimated $740,000 in manufacturing overhead, 60,000 direct labor hours, and 80,000 machine hours. Actual manufacturing costs at the end of the year were $488,000 in manufacturing overhead. During the year, 35,000 direct labor hours and 67,000 machine hours were incurred. If overhead is applied based on direct labor hours, how much overhead was applied during the year?

Please help me solve this general accounting problem with the correct financial process.

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What is the degree of operating leverage?

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I am trying to find the accurate solution to this general accounting problem with appropriate explanations.

What is the solution of this problem help .