G Martin Company current https://newconnect.mheducation.com/flow/connecthtml TES

Question

G Martin Company current https://newconnect.mheducation.com/flow/connecthtml TEST 2 5 The following income statement is provided for Vargas, Inc Sales revenue (2,200 units $19.70 per unit) cost of goods sold (variable; 2,200 units x $9,70 per unit) 43,340 (21,348) (3789) 18,3e0 (s,7e0) (4,700) (3,740) 02 3547Cost of goods sold (fixed) Gross margin Administrative salaries Depreciation Supplies (2,200 units $1.70 per unit) Net income 5 4,160 What is this company's magnitude of operating leverage? Multple Choice

Explanation / Answer

operating leverage = contribution margin / net income

sales 43340 - cost of goods sold variable 21340 - supplies3740 =18260

18260 / 4160 = 4.39

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