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Degree of Operating Leverage

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A manufacturer of cedar shingles has supplied the following data:

Bundles of cedar shakes produced and sold 280,000
Sales revenue 2,072,000
Variable manufacturing expense 1,134,000
Fixed manufacturing expense 436,000
Variable selling and administrative expense 238,000
Fixed selling and administrative expense 164,000
Net operating income 100,000

Reference: 6-9

The company's degree of operating leverage is closest to:

7.00
2.29
2.80
20.72

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The solution explains how to calculate the degree of operating leverage

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