What Is the Degree of Operating Leverage for Flippin' Out

question 54

Multiple Choice

What is the degree of operating leverage for Flippin' Out Company, a maker of scuba flippers, if the firm sells its finished product for $50 per unit with variable costs per unit of $15? The company has fixed operating costs of $2,000,000 and sells 200,000 units (the answer is rounded) .

• A)2.0
• B)3.7
• C)6.5
• D)1.4