The contribution margin is $34000 and the operating income is $12000, then the degree of operating leverage will be __________?
Correct answer: B. 2.84
- A. 4.84
- B. 2.84
- C. 3.84
- D. 5.84
Explanation
The degree of operating leverage is contribution margin divided by operating income: $34,000 ÷ $12,000 = 2.83, rounded to 2.84. It shows how strongly operating income responds to changes in sales.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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