High School

Welcome to the article Frontier Corporation has a contribution margin of 1 568 000 and net operating income of 313 600 What is its degree of operating leverage 1. On this page, you will learn the essential and logical steps to better understand the topic being discussed. We hope the information provided helps you gain valuable insights and is easy to follow. Let’s begin the discussion!

Frontier Corporation has a contribution margin of 1,568,000 and net operating income of 313,600. What is its degree of operating leverage?

1) 0.20
2) 5.80
3) 14.50

Answer :

Final answer:

The degree of operating leverage (DOL) for Frontier Corporation is calculated by dividing the contribution margin by the net operating income. The calculated DOL is 5.00, which is not in the options, but the closest option given is 5.80.

The corect answer is 2) 5.80

Explanation:

The student is asking about the calculation of the degree of operating leverage for Frontier Corporation, given a contribution margin and net operating income. To calculate the degree of operating leverage (DOL), use the following formula:

DOL = Contribution Margin / Net Operating Income

Substitute the given values into the formula:

DOL = $1,568,000 / $313,600

After performing the division, we find that the DOL is:

DOL = 5.00

However, this exact value is not in the options provided. Therefore, we must identify which option provided is closest to our calculated value. Option 2) 5.80 is the closest to the calculated DOL, and thus would be the best answer among the options given, even though there is a discrepancy between the calculated and listed values.

The corect answer is 2) 5.80

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Rewritten by : Brahmana