The Masquerade is a casino that operates on a river. Casinos attain a profit by collecting the bets/wagers placed by guests, but giving back on average a % of revenues as winnings for the customers and incurring costs of running the operations in a casino utilizing various resources. In a typical month, the casinos gambling area (excluding the food, beverages and lodging) had the following revenues and expenses: There were 500,000 guests. You can assume that all guests will wager the average amount always.

Revenues (wagers by guests) $10,000,000

Winnings given back to Guests $3,000,000 (as a % of revenues)

Labor Costs (salaries) $1,000,000

Commissions for employees $700,000 (as a % of revenues)

Utilities (unrelated to the number of guests) $600,000

Utilities (related to the number of guests) $300,000

Depreciation on Casino buildings and equipment $2,000,000

Other monthly admin. and facility costs $400,000

The casino pays combined state and federal taxes equal to 25% of profit before taxes.

What is the operating leverage in a typical month? What will be the operating leverage if the number of guests were to drop by 50% because of an outbreak?