Asked by
Katie Dickens
on Nov 12, 2024Verified
What is the company's degree of operating leverage
A) 0.12.
B) 2.50.
C) 3.30.
D) 0.40.
Degree of Operating Leverage
A financial metric that measures the sensitivity of a company's operating income to its sales, indicating the proportion of fixed to variable costs.
Variable Expenses
Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor.
Fixed Expenses
Costs that remain constant over a specified period regardless of changes in the level of activity or volume of production.
- Acquire a clear understanding of the role of operating leverage in affecting profit margins.
Verified Answer
MK
Learning Objectives
- Acquire a clear understanding of the role of operating leverage in affecting profit margins.