Which analysis involves a comparison of the cost of operating additional robotic tailors with additional revenues generated by increased product sales?
Which analysis involves a comparison of the cost of operating additional robotic tailors with additional revenues generated by increased product sales?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter15: Lean Accounting And Productivity Measurement
Section: Chapter Questions
Problem 12DQ: Explain why changes in value-stream profitability may be better information than individual product...
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Question
Which analysis involves a comparison of the cost of operating additional robotic tailors with additional revenues generated by increased product sales?
Expert Solution
Degree of operating Leverage (DOL)
DOL is the measure of operating risk of the business and shows the effect of use of fixed operating cost on the operating profit. It shows the change in Net Income per unit change in sales.
It can be calculated as follows:
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