Homework Answers
The degree of operating leverage is computed as shown below:
= ((Sales - variable cost) x Number of units) / ((Sales - variable cost) x Number of units - Fixed cost)
= (($ 63.54 - $ 18.15) x 416) / ( ($ 63.54 - $ 18.15) x 416 - $ 7,590)
= $ 18,882.24 / $ 11,292.24
= 1.67 Approximately
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