Question

U.S. Steal has the following income statement data Units Sold 80,000 160,000 Total Variable Costs Fixed Costs $ 70,000e 70,000 Operating Income Total Revenue Total Costs $ 230,000 270,000 (Loss) $ 400,000 $ 170,000 100,000 200,000 500,000 230,000 The top row of the table has the beginning values and the bottom row of the table has the ending values a. Compute the degree of operating leverage (DOL) based on the formula below. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Percent change in operating income DOL - Percent change in units sold Degree of operating leverage b. Recompute DOL using the formula given below. There may be a slight difference due to rounding. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) P-VC DOL - Q(P VC)- FC Q represents beginning units sold (all calculations should be done at this level) P can be found by dividing total revenue by units sold VC can be found by dividing total variable costs by units sold Degree of operating leverage

Answer 1