Based on the income statements of the three following retail businesses, which company has the highest operating leverage? alpha company -revenue $200,000 -variable costs ($95,000)-contribution margin $105,000-fixed costs ($80,000)-net income $25,000beta company-revenue $200,000-variable costs ($155,000)-contribution margin $45,000-fixed costs ($20,000)-net income $25,000gamma company-revenue $200,000-variable costs ($125,000)-contribution margin $75,000-fixed costs ($50,000)-net income $25,000

The Alpha company has higher operating leverage than the beta company and the gamma company.

Explanation:

The formula to compute the operating leverage is shown below:

Operating leverage = Contribution ÷ Net income

For Alpha company,

The operating leverage equals to

= $105,000 ÷ $25,000

= 4.2

For Beta company,

The operating leverage equals to

= $45,000 ÷ $25,000

= 1.8

For Gamma company,

The operating leverage equals to

= $75,000 ÷ $25,000

= 3

Among these three companies, the Alpha company has higher operating leverage than the beta company and the gamma company

um sure