Engineering Board Exam Reviewer · Break-Even Analysis · medium
A firm sells 12,000 units at P100 each. The variable cost is P60 per unit and the fixed cost is P300,000. Find the degree of operating leverage (contribution margin divided by profit).
- 1.5
- 0.38
- 2.67
- 4
Answer
C. 2.67
Solution
Contribution margin =12,000(100-60)=P480,000. Profit =480,000-300,000=P180,000. DOL= 480,000180,000=2.67.
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