Financial Management:

Sales (100,000 units) $1,000,000

Total variable costs - 300,000

Contribution margin 700,000

Total fixed manufacturing costs -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 table above. The degree of operating leverage is _____.

Select one:

a. 2.22X.

b. 1.40X.

c. 1.56X.

d. 3.33X.