Haywood Co. reports the following data: Sales..............................................................................$ 6,160,000 Variable costs................................................................(4,620,000) Contribution margin .....................................................$ 1,540,000 Fixed costs.......................................................................(440,000) Operating

Question:

Haywood Co. reports the following data:

Sales..............................................................................$ 6,160,000

Variable costs................................................................(4,620,000)

Contribution margin.....................................................$ 1,540,000

Fixed costs.......................................................................(440,000)

Operating income...........................................................$ 1,100,000

Determine Haywood Co.’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...

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