Assuming no change in cost behaviour as volume increases, DOL will decrease
June CM = 8,000 * 10.30 = 82,400 DOL = 82,400/(82,400 - 80,000) = 34.33.
For July = (10,000 * 10.30)/(10,000 * 10.30 - 80,000) = 4.477.

-The degree of operating leverage for July is closest to which of the following?
A) 4.48.
B) 3.48.
C) 4.22.
D) 8.70.

Question

Assuming no change in cost behaviour as volume increases, DOL will decrease
June CM = 8,000 * 10.30 = 82,400 DOL = 82,400/(82,400 - 80,000) = 34.33.
For July = (10,000 * 10.30)/(10,000 * 10.30 - 80,000) = 4.477.

-The degree of operating leverage for July is closest to which of the following?
A) 4.48.
B) 3.48.
C) 4.22.
D) 8.70.

Quizplus · Accepted Answer

The calculation for July's degree of operating leverage (DOL) is correctly given as 4.477, which is closest to 4.48.

Assuming No Change in Cost Behaviour as Volume Increases, DOL