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Homework answers / question archive / Tom's Taxidermy has a monthly target operating income of $25,000
Tom's Taxidermy has a monthly target operating income of $25,000. Variable expenses are 75% of sales and monthly fixed expenses are $15,000. What is Tom's operating leverage factor at the target level of operating income?
A) 0.40
B) 0.63
C) 1.60
D) 2.67
Answer: C
Explanation: C)
Target income 25,000
+ Fixed expense 15,000
40,000
Divided by target Inc. 25,000
Operating leverage = 1.60
