What Is the Degree of Operating Leverage for Flippin' Out

Multiple Choice

What is the degree of operating leverage for Flippin' Out Company, a maker of scuba flippers, if the firm sells its finished product for $50 per unit with variable costs per unit of $15? The company has fixed operating costs of $2,000,000 and sells 200,000 units. (The answer is rounded.)

A) 2.0
B) 3.7
C) 6.5
D) 1.4