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Hello students, here is a question.
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A company has 100 ,000 of sales and $60 ,000 of variable cost and $30 ,000 of fixed cost.
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The degree of operating leverage we have to calculate here.
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So, we have four options given here.
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Option a is 0 .1, option b is 0 .3, option c is 0 .4, and option d is 4 .0.
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So, we need to calculate the contribution margin for this.
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Our first step is to calculate the contribution margin.
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So, the formula will be sales minus variable.
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So, the values will be $100 ,000 is a sales minus $60 ,000 is a variable cost.
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So, it comes to $40 ,000.
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Now, we will calculate the operating income.
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Calculation of operating income...