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

Respuesta :

Answer:

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