What is operating leverage? How is the degree of operating leverage helpful to managers?

A$.$ It describes the effects that fixed costs have on changes in operating income as changes occur in units sold and contribution margin. The degree of operating leverage at a given level of sales helps managers calculate

the effect of fluctuations in sales on operating income.

B$.$ It describes the quantity of output sold at which total revenues equal total costs. The degree of operating leverage helps managers avoid operating losses.

C$.$ It describes the amount by which budgeted $($or actual$)$ revenues exceed breakeven revenues. The degree of operating leverage helps managers know how far they can fall below budget before the breakeven point is

reached and if they are in danger of suffering a loss.

D$.$ It describes the measure of competitiveness $-$ how much a company can charge for its products over and above the cost of acquiring them. The degree of operating leverage helps managers know how much of

the company's revenues are available to cover fixed costs.