[amp_mcq option1=”1.48″ option2=”1.78″ option3=”1.31″ option4=”2.42″ correct=”option1″]<\/p>\n
The correct answer is A. 1.48.<\/p>\n
Operating leverage is a measure of how a firm’s operating income responds to changes in sales. It is calculated by dividing the contribution margin by the operating income. The contribution margin is the amount of revenue that remains after deducting variable costs. The operating income is the amount of revenue that remains after deducting both variable and fixed costs.<\/p>\n
In this case, the contribution margin is Rs. 34 lakh (74 lakh – 40 lakh). The operating income is Rs. 26 lakh (74 lakh – 40 lakh – 8 lakh). Therefore, the operating leverage is 1.48 (34 lakh \/ 26 lakh).<\/p>\n
Option B is incorrect because it is the contribution margin to sales ratio. This ratio is a measure of how much of each sales dollar is available to cover fixed costs and contribute to operating income.<\/p>\n
Option C is incorrect because it is the operating income to sales ratio. This ratio is a measure of how much of each sales dollar is available to cover fixed costs and contribute to operating income.<\/p>\n
Option D is incorrect because it is the fixed costs to sales ratio. This ratio is a measure of how much of each sales dollar is used to cover fixed costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”1.48″ option2=”1.78″ option3=”1.31″ option4=”2.42″ correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-52916","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"\n