The information for Primrose Corporation is given below. Degree of operating leverage: 3...
Question:
The information for Primrose Corporation is given below.
| Degree of operating leverage: | 3 |
| Break-even revenue: | $220,000 |
| Variable Expense: | 45% of Sales |
What is the actual net operating income?
A. $ 60,500
B. $ 66,000
C. $ 181,500
D. $ 198,000
E. None of the above
Operating Leverage:
Operating leverage is the relationship between sales and the operating profit. It measures how the operating profit would change in proportion to the change in sales. It is helpful in estimating net profit.
Answer and Explanation: 1
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The correct answer to this question is E. None of the above
Computation of net operating income:
Degree of operating leverage = contribution...
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Operating Leverage: Definition, Calculation & Examples
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Understand what operating leverage is. Learn about operating leverage formula, how to calculate operating leverage, and review an example.
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