Question

The degree of operating leverage can be measured by​ ________. A. multiplying the contribution margin by sales revenue B. dividing the fixed costs by contribution margin C. dividing the contribution margin by operating income D. dividing the fixed costs by the sales price per unit

Answer 1

Answer:

Option C is the answer

Explanation:

The degree of operating leverage is measured by dividing the contribution margin by operating income.

The degree of operating leverage (DOL) is the ratio of contribution margin to operating income. It measures how much the operating income of a company will change in response to a change in sales. A Companies that have higher proportion of fixed costs to variable cost will have greater levels of operating leverage.