The Following Income Statement Is Provided for Vargas,Inc What Is This Company's Magnitude of Operating Leverage?
A) 3

Multiple Choice

The following income statement is provided for Vargas,Inc. $$\begin{array} { l r } \text { Sales reverule (2,500 urits } \times \$ 60 \text { per unit) } & \$ 150,000 \\\text { Cost of goods sold (variable; } 2,500 \text { urits } \times \$ 20 \text { per unit) } & ( 50,000 ) \\\text { Cost of goods sold (fixed) } & \underline{ ( 8,000 ) } \\\text { Gross margin } & 92,000 \\\text { Adrninistrative salaries } & ( 42,000 ) \\\text { Depreciation } & ( 10,000 ) \\\text { Supplies } ( 2,500 \text { urits } \times \$ 4 \text { per unit) } & \underline{( 10,000 ) } \\\text { Net income } & \underline{ \$ 30,000} \\\end{array}$$ What is this company's magnitude of operating leverage?

A) 3.07
B) 0.33
C) 3.00
D) 1.67