The following is Allison Corporation’s contribution format income statement for last month:
Account title
Amount in SR
Sales 850,000
Variable Cost 250,000
Contribution Margin 600,000
Fixed Expenses 450,000
Net operating Income 150,000
The company has no beginning or ending inventories. The company produced and sold 15,000 units last month.
Required:
Compute Margin of Safety.
What is the company’s degree of operating leverage?