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27 June, 06:45

SungSam Enterprises reports the following dа ta: Sales $340,000 Variable costs 180,000 Contribution margin $160,000 Fixed costs 80,000 Income from operations $ 80,000 Determine SungSam Enterprises's operating leverage.

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  1. 27 June, 07:25
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    SungSam Enterprises's operating leverage is 2.0

    Explanation:

    Operating leverage is a financial efficiency ratio to measure the degree to which a firm or project can increase operating income by increasing revenue.

    Operating leverage is calculated by using following formula:

    Operating leverage = Contribution margin/Net income

    SungSam Enterprises has Contribution margin of $160,000 and Income from operations of $80,000

    SungSam Enterprises's operating leverage = $160,000/$80,000 = 2.0
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Home » Business » SungSam Enterprises reports the following dа ta: Sales $340,000 Variable costs 180,000 Contribution margin $160,000 Fixed costs 80,000 Income from operations $ 80,000 Determine SungSam Enterprises's operating leverage.
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