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The Degree of Operating Leverage for Madrigal Company Is 2

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The degree of operating leverage for Madrigal Company is 2.The actual operating income is $14,000.If the company expects a 25% increase in sales,operating income should increase by $3,500.


Definitions:

Average

A statistical measure that denotes the central value of a set of numbers.

Dollar-Value LIFO

An inventory valuation method that uses the last-in, first-out (LIFO) principle but measures inventory in dollar amounts rather than in physical units.

Specific Identification Method

An inventory valuation method that tracks the cost of specific items sold and remaining inventory.

Manipulation Of Profits

The unethical or illegal adjustment of a company's financial records in order to present an inaccurately positive picture of its financial performance.

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