Asked by
Shifa alameri
on Nov 19, 2024
Verified
The degree of operating leverage is computed by dividing sales by the contribution margin.
Operating Leverage
A measure of how revenue growth translates into growth in operating income, demonstrating the effect of fixed costs on profits.
Contribution Margin
The difference between the sales price of a product and its variable costs, used to cover fixed costs and profit.
- Understand the computation and interpretation of the degree of operating leverage.
Verified Answer
AS
Learning Objectives
- Understand the computation and interpretation of the degree of operating leverage.