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Degree of Operating Leverage
Point 1: Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $55 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 5,000 units sold is $50,500.
Required:
Qurestion 1 : Calculate the degree of operating leverage. (Round your answer to the nearest tenth.)
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