Degree of Operating Leverage
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year.
Unit variable cost is $50 (includes direct materials, direct labor, variable factory overhead, and variable selling expense).
Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense).
Operating income at 5,000 units sold is $75,500.
Calculate the degree of operating leverage. (Round your answer to the nearest tenth.)
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