Ruth Enterprises reports the following data: Sales $800,000 Variable costs 350,000 Contribution margin $450,000 Fixed costs 225,000

Question:

Ruth Enterprises reports the following data:

Sales $800,000
Variable costs 350,000
$450,000
Fixed costs 225,000
Income from operations $225,000

Determine Ruth Enterprises’s operating leverage.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...