Goodman Company has sales of 3,000 units at $80 per unit.Variable costs are 35% of the sales price.If total fixed costs are $66,000,what is the degree of operating leverage rounded to 2 decimal places?
A) 0.79.
B) 0.93.
C) 2.67.
D) 1.73.DOL = 156,000/(156,000 - 66,000)= 1.73

Question

Quizplus · Accepted Answer

The degree of operating leverage (DOL) helps to determine how sensitive the company's profits are to changes in sales. A higher DOL means that a small change in sales can have a larger impact on profits. In this case, DOL is calculated as 156,000/(156,000 - 66,000) = 1.73. Therefore, the best choice is D.

Goodman Company Has Sales of 3,000 Units at $80 Per