Windows is a small company that installs windows. Its cost structure is asfollows: Selling price from each
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Question:
Windows is a small company that installs windows. Its cost structure
is asfollows:
Selling price from each window installation
$900
Variable cost of each window installation
$850
Annual fixed costs
$165,000
Number of window units sold
6,900
Target operating income
$180,000
Templeton is considering changing its sales compensation for next year. Templeton would pay salespeople a 2% commission next year and reduce fixed selling costs by 64,500
Calculate the degree of operating leverage at sales of 6,900 units under the two options. Comment briefly on the result.
Begin by selecting the labels for the degree of operating leverage formula.
Degree of
/
=
operating leverage
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