Matthew's Fish Fry has a monthly target operating income of $7,200. Variable expenses are 60% of sales and monthly fixed expensesare $1,800 What is Matthew's operating leverage factor at the target level of operating income? A) 0.75 B) 5.00 C) 1.25 D) 0.80

Question

Buckeye

Business

27 April, 09:52

Matthew's Fish Fry has a monthly target operating income of $7,200. Variable expenses are 60% of sales and monthly fixed expensesare $1,800 What is Matthew's operating leverage factor at the target level of operating income? A) 0.75 B) 5.00 C) 1.25 D) 0.80

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Answers (1)

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Rodney Dickerson · Answer 1

The answer is C) 1.25

Explanation:

Operating Leverage = (operating income + fixed expenses) / operating income

Operating Leverage = ($7,200 + $1,800) / $7,200 = 1.25