Alberts Enterprises has sales of 3,000 units at $80 per unit. Variable costs are 35% of...

Alberts Enterprises has sales of 3,000 units at $80 per unit. Variable costs are 35% of the sales price. If total fixed costs are $66,000, what is the the degree of operating leverage?

Expert Solution

Degree of operating leverage

=

1.73

Sales(3000*80)	240,000.00
Variable costs(35%)	84,000.00
Contribution Margin	156,000.00
Fixed Cost	66,000.00
Operating income	90,000.00

Degree of operating leverage	=	Contribution Margin	/	Operating income
Degree of operating leverage	=	156,000.00	/	90,000.00
Degree of operating leverage	=	1.73

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