What was the operating leverage factor?

Using Harrah Company: If the sales revenues increase by 15%, what will be the percentage increase in income before income taxes?

 

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Harrah Company produced and sold 45,000 units of a single product last year, with the following results: Sales revenue Manufacturing costs: Variable Fixed Selling costs: Variable Fixed Administrative costs: Variable Fixed P1,350,000 585,000 270,000 40,500 54,000 184,500 108,000 Harrah Company produced and sold 45,000 units of a single product last year, with the following results: Sales revenue Manufacturing costs: Variable Fixed Selling costs: Variable Fixed Administrative costs: Variable Fixed P1,350,000 585,000 270,000 40,500 54,000 184,500 108,000

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To calculate the operating leverage factor we first need to find the contribution margin and the ope... View the full answer