Answer:
b. contribution margin divided by net income.
Explanation:
The formula to compute the degree of operating leverage is shown below:
= (Sales - Variable costs) ÷ (Sales - Variable costs - Fixed costs)
The (Sales - Variable costs) = Contribution margin
The (Sales - Variable costs - Fixed costs) = EBIT
The EBIT is also known as the net income. EBIT means Earning before interest and taxes
Hence, the correct option is b.
