Question

A firm has fixed operating costs of​ $650,000, a sales price per unit of​ $20, and a variable cost per unit of​ $13. at a base sales level of​ 500,000 units, the​ firm's degree of operating leverage is​ ________.

Answer 1

The firm's degree of operating leverage is 1.23. Operating leverage is the measure of the degree to which a firm or project incurs a combination of fixed and variable costs. Businesses have more leverage when they have more sales resulting in a high gross merger and less fixed and variable costs. 
To solve: Change in EBIT percent / change in sales percent