QuestionMay 29, 2025

Fill in the Blank Question Adams, Inc, has sales of 100,000 with a contribution margin of 60,000 and net income of 20,000 Baron, Inc. has sales of 110,000 with a contribution margin of 44,000 and net income of 22,000 Thus, the degree of operating leverage is square for Adams, Inc. and square for Baron, Inc. (Enter your answers as whole numbers)

Fill in the Blank Question Adams, Inc, has sales of 100,000 with a contribution margin of 60,000 and net income of 20,000 Baron, Inc. has sales of 110,000 with a contribution margin of 44,000 and net income of 22,000 Thus, the degree of operating leverage is square for Adams, Inc. and square for Baron, Inc. (Enter your answers as whole numbers)
Fill in the Blank Question Adams, Inc, has sales of 100,000 with a contribution margin of 60,000 and net income of 20,000 Baron, Inc. has sales of 110,000 with a contribution margin of 44,000 and net income of 22,000 Thus, the degree of operating leverage is square for Adams, Inc. and square for Baron, Inc. (Enter your answers as whole numbers)

Solution
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Answer

3 for Adams, Inc. and 2 for Baron, Inc. Explanation 1. Calculate Degree of Operating Leverage for Adams, Inc. Use the formula: **Degree of Operating Leverage (DOL) = \frac{\text{Contribution Margin}}{\text{Net Income}}**. For Adams, Inc., DOL = \frac{60,000}{20,000}. 2. Calculate Degree of Operating Leverage for Baron, Inc. Use the same formula: For Baron, Inc., DOL = \frac{44,000}{22,000}.

Explanation

1. Calculate Degree of Operating Leverage for Adams, Inc.<br /> Use the formula: **Degree of Operating Leverage (DOL) = \frac{\text{Contribution Margin}}{\text{Net Income}}**. For Adams, Inc., DOL = $\frac{60,000}{20,000}$.<br /><br />2. Calculate Degree of Operating Leverage for Baron, Inc.<br /> Use the same formula: For Baron, Inc., DOL = $\frac{44,000}{22,000}$.
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