Question

Total contribution margin in dollars divided by pretax income is the: Multiple Choice Degree of operating leverage. Contribution margin ratio. Margin of safety. Sales mix. Break-even point in units.

Answer 1

Degree of operating leverage.

Step-by-step explanation:

As we know that the formula of the degree of operating leverage which is given below:

= (Sales - Variable costs) ÷ (Sales - Variable costs - Fixed costs)

where,

Contribution margin = (Sales - Variable costs)

And,

EBIT i.e Pretax Income = (Sales - Variable costs - Fixed costs)

So the first option is correct and the same is to be considered