Answer:
A. 1.60
Explanation:
For computation of operating leverage factor first we need to determine the required contribution which is shown below:-
Required Contribution = Target Profit + Fixed Cost
= $25,000 + $15,000
= $40,000
Operating Leverage Factor = Contribution ÷ Operating Income
= $40,000 ÷ $25,000
= $1.60
Therefore for computing the operating leverage factor we simply applied the above formula.
