Answered step by step
Verified Expert Solution
Question
1 Approved Answer
U.S. Steal has the following income statement data: Units Sold 30,000 50,000 Total Variable Costs $ 90,000 150,000 Fixed Costs $ 30,000 30,000 Total Costs
U.S. Steal has the following income statement data: Units Sold 30,000 50,000 Total Variable Costs $ 90,000 150,000 Fixed Costs $ 30,000 30,000 Total Costs $ 120,000 180,000 Total Revenue $ 240,000 400,000 Operating Income (Loss) $ 120,000 220,000 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.) DOL Percent change in operating income 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.) DOL Q(P - VC) VC) - FC Q represents beginning units sold (all calculations should be done at this level). Pcan 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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started