Answer:
degree of operating leverage= 4
Explanation:
Giving the following information:
Sales in North Corporation increased from $60,000 per year to $63,000 per year while net operating income increased from $10,000 to $12,000.
The degree of operating leverage is the %change in the operating income, divided by the change in sales. It measures how much of the operating income varies with changes in sales.
degree of operating leverage= % change on income/ % change on sales
degree of operating leverage= [(12,000 - 10,000)/10,000] / [(63,000 - 60,000)/60,000]
degree of operating leverage= 0.2 / 0.05= 4
