Westminster Co. reports the following data: Sales ..............$ 875,000 Variable costs ........... 425,000 Contribution margin .......$ 450,000

Question:

Westminster Co. reports the following data:

Sales ..............$ 875,000

Variable costs ........... 425,000

Fixed costs .......... 150,000

Income from operations ......$ 300,000

Determine Westminster 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...