Pricher Corporation”s income statement for last year appears below:
Sales
$2,000,000
Cost of goods sold:
Direct materials
$500,000
Direct labor (variable)
150,000
Variable manufacturing overhead
50,000
Fixed manufacturing overhead
600,000
Gross margin
$500,000
1,300,000
Selling and administrative expenses:
150,000
700,000
Variable
100,000
Fixed
300,000
400,000
Net operating income
$ 300,000
The degree of operating leverage last year was:
A) 0.33
B) 2.33
C) 4.00
D) 3.33