The higher the degree of operating leverage, the higher the break-even point, regardless of how it's measured.

Question

Quizplus · Accepted Answer

The degree of operating leverage (DOL) measures how a company's operating income changes with sales, not directly its break-even point. A higher DOL indicates a company's earnings are more sensitive to changes in sales, but the break-even point depends on fixed costs, variable costs, and sales price, not directly on the DOL.

The Higher the Degree of Operating Leverage, the Higher the Break-Even