Answer
Degree of operating leverage = Contribution margin $\div$ Net operating income = 8,000 $\div$ 2,000 = 4
Work Step by Step
Contribution margin = 8,000 dollars
Net operating income = 2,000 dollars
Degree of operating leverage = Contribution margin $\div$ Net operating income = 8,000 $\div$ 2,000 = 4
This degree of operating leverage shows that the Oslo Company’s net operating income grows four times as fast as its sales.
