Weis Products Has Fixed Operating Costs of $20 Million and a Variable

Multiple Choice

Weis Products has fixed operating costs of $20 million and a variable cost ratio of 0.55. Weis has 4 million common shares outstanding and a marginal tax rate of 45%. What is Weis's degree of operating leverage at an expected sales level of $150 million?

A) 1.00
B) 1.74
C) 1.42
D) 1.32