Kendall Company has sales of 2,375 units at $40 a unit. Variable expenses are 20% of the selling
price. If total fixed expenses are $66,000, the degree of operating leverage is:
rev: 03_06_2012
2.07
1.90
9.50
7.60
Kendall Company has sales of 2,375 units at $40 a unit. Variable expenses are 20% of the selling
price. If total fixed expenses are $66,000, the degree of operating leverage is:
Solution
Degree of operating leverage =(sales variable costs)÷(sales variable costs fixed costs)
=(2,375×$40-2,375×$40×20%)÷(2,375×$40-2,375×$40×20%-$66,000)
=7.6