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13 January, 07:51

If sales are $400,000, variable costs are 75% of sales, and operating income is $40,000, what is the operating leverage? (round to one decimal place.)

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  1. 13 January, 07:56
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    If sales are $400,000, variable costs are 75% of sales, and operating income is $40,000, what is the operating leverage?

    Sales = $400,000

    Variable costs =.75

    ($400,000) (.75) = $300,000

    Operating leverage = ($400,000 - $300,000) / $40,000 = 2.5

    Operating leverage is 2.5
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