Degree of operating leverage (DOL) measures the sensitivity of OCF in response to changes of The higher the DOL, the_ the volatility of a firm's operating income. Select one: a. sales quantity; lower b. sales quantity; higher O c. fixed costs; lower O d. fixed costs; higher Oe. variable costs; higher

Degree of operating leverage (DOL) measures the sensitivity of OCF in response to changes of The higher the DOL, the_ the volatility of a firm's operating income. Select one: a. sales quantity; lower b. sales quantity; higher O c. fixed costs; lower O d. fixed costs; higher Oe. variable costs; higher

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6MCQ: The use of fixed costs to extract higher percentage changes in profits as sales activity changes...

See similar textbooks

Similar questions

Operating leverage measures the: 1. Change in profit when sales changes 2. change in contrribution when sales changes 3. change in BEP when fixed cost changes 4. change in BEP when sales changes
3. Give an example of CVP and Compute BEP, Changes in Net Income, Margin of Safety, and Degree of Operating Leverage.
Operating Leverage=Quantity×(Price per unit-Variable cost per unit)Quantity×(Price per unit-Variable cost per unit)-Fixed operating cost is the correct function?
Return on investment (ROI) could be calculated using which of the following formulas? W Multiple Choice O O X Margin * (Net operating income + Sales) O X O Margin x (Average operating assets + Sales) X Margin * (Sales - Net operating income) Type here to search X Margin × (Sales - Average operating assets) < Prev 2 of 10
Which of the following option shows the rate at which company is earning profit? Select one: a. All options are correct b. Margin of safety c. Contribution margin d. Profit volume ratio
On a cost-volume-profit graph, when the Total Cost line is higher than the Total Revenue line, the difference represents Select one: O A. a positive return on the investment O B. a net loss O C. net income O D. not enough information is presented
If fixed costs are a __________ percentage of __________, operating leverage is __________. A. small / total costs / low B. small / total sales / low C. small / total costs / high D. large / total costs / low
What analysis ensures that the income for the firm will cover its variable costs? a. ratio analysis b. financial analysis c. cost volume profit analysis d. sales analysis
Identify the formula that computes the degree of operating leverage (DOL). a.Total variable cost / Sales b.Unit variable cost / Price c.Break-even sales / Variable cost ratio d.Total contribution margin / Operating income e.Sales / Unit contribution marg
Which of the following is the indicator of the rate at which company is earning profit? Select one: a. Margin of safety b. All options are correct c. Contribution margin d. Profit volume ratio
The degree of operating leverage (DOL) is interpreted as the ratio of the percentage change in net income to the percentage change in EBIT. Select one: True False
Required: 1. The company's margin safety in units is closest to? 2. The company's degree of operating leverage is closest to?