Question

For product 2, compute the contribution margin ratio, the break-even point in dollar sales, and the degree of operating leverage. If sales in dollars increase by 10

Answer 1

To compute the contribution margin ratio, break-even point in dollar sales, and degree of operating leverage for product 2.

Step-by-step explanation:

To compute the contribution margin ratio for product 2, divide the contribution margin by the sales revenue. The contribution margin is the difference between the sales revenue and the variable expenses. The break-even point in dollar sales can be calculated by dividing the fixed expenses by the contribution margin ratio. The degree of operating leverage can be determined by dividing the contribution margin by the operating income.