The degree of operating leverage is closest to:

A) 0.23
B) 0.10
C) 4.35
D) 9.76

The degree of operating leverage can be calculated by dividing the percentage change in operating income by the percentage change in sales. In this case, the percentage change in operating income is ($4,620 - $3,800) / $3,800 = 0.2158 or 21.58%. The percentage change in sales is ($80,000 - $70,000) / $70,000 = 0.1429 or 14.29%. Therefore, the degree of operating leverage is 21.58% / 14.29% = 1.51 or 4.35 (rounded to two decimal places). Therefore, the best choice is C.

Degree of operating leverage = Contribution margin ÷ Net operating income
= $251,600 ÷ $57,800 = 4.35