Kendall Company has sales of 1,500 units at $50 a unit. Variable expenses are 40% of the selling price. If total fixed expenses are $35,000, the degree of operating leverage is:

rev: 03_06_2012

	3.00
→	4.50
	7.50
	3.17

Kendall Company Contribution Income Statement
	Total
Sales (1,500 units × $50 per unit)	$75,000
Variable expenses (.40 × $75,000)	30,000
Contribution margin	45,000
Fixed expenses (given)	35,000
Net operating income	$10,000

Degree of operating leverage = Contribution margin ÷ Net operating income

= $45,000 ÷ $10,000 = 4.50