The degree of operating leverage in a company is smallest at the break-even point and increases as sales rise.

Question

Quizplus · Accepted Answer

The degree of operating leverage is highest at the break-even point because at this point, a small change in sales results in a large change in operating income due to the high proportion of fixed costs. As sales increase beyond the break-even point, the degree of operating leverage decreases.

The Degree of Operating Leverage in a Company Is Smallest