The degree of operating leverage for a firm equals the ratio of ________ to ________.
A) fixed costs; variable costs
B) variable costs; fixed costs
C) fixed costs: operating profit
D) contribution margin; net income

Question

Quizplus · Accepted Answer

The degree of operating leverage is calculated as the ratio of the contribution margin to net income, reflecting how a change in sales volume will affect operating income.

The Degree of Operating Leverage for a Firm Equals the Ratio