Answer:
For 13,200, the Operating Leverage is 3.46.
For 11,200, the Operating Leverage is 2.94.
Explanation:
The first step is to calculate the Contribution Margin per unit:
Operating Leverage = (# of units * Contribution margin per unit) / Net Operating income
Here,
Number of Units are 12,200 Units
Net Operating income $67,100
Operating Leverage is 3.2
By putting values, we have:
3.2 = (12,200 Units * Contribution margin per unit) / $67,100
(3.2 * $67,100) / 12,200 Units = Contribution margin per unit
Contribution margin per unit = $17.6 per unit
For 13,200 units:
By putting value of units and keeping other variables constant, we have:
Operating Leverage = (13,200 units x $17.60 per unit) / $67,100
Operating Leverage = 3.46
For 11,200 units:
By putting value of units and keeping other variables constant, we have:
Operating Leverage = (11,200 units * $17.60 per unit) / $67,100
Operating Leverage = 2.94
