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Sales (100,000 units) $ 1,000,000 Variable costs 300,000 Contribution margin 700,000 Fixed manufacturing cost 200,000 Operating income 500,000 Interest 75,000 Earnings before taxes 425,000 Taxes

Sales (100,000 units) $ 1,000,000 Variable costs 300,000 Contribution margin 700,000 Fixed manufacturing cost 200,000 Operating income 500,000 Interest 75,000 Earnings before taxes 425,000 Taxes (30%) 127,500 Net Income $ 297,500 Refer to the figure above. The Degree of Operating Leverage is A. 1.40x B. 1.56x C. 3.33x D. 2.22x

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