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22 October, 14:51

Tom Company reports the following dа ta: Sales $170,753 Variable costs 89,053 Fixed costs 38,700 Determine Tom Company's operating leverage. Round your answer to one decimal place.

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  1. 22 October, 14:59
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    1.9

    Explanation:

    Given that,

    Sales = $170,753

    Variable costs = $89,053

    Fixed costs = $38,700

    Contribution Margin:

    = Sales - Variable costs

    = $170,753 - $89,053

    = $81,700

    Net Income = Contribution Margin - Fixed costs

    = $81,700 - $38,700

    = $43,000

    Operating Leverage:

    = Contribution margin : Net Income

    = $81,700 : $43,000

    = 1.9
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