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Question - The following is Addison Corporation's contribution format income statement for last month:
Sales $1,000,000
Less: variable expenses 700,000
Contribution margin 300,000
Less: fixed expenses 180,000
Operating income $120,000
The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month.
Required - What is the company's degree of operating leverage?
What is the reason for the difference in income from operations reported for the two levels of production by the absorption costing income statement
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