he degree of operating leverage is equal to: Group of answer choices FC / OCF. VC / OCF. 1 FC / OCF. 1 VC / OCF. 1 Picture FC /

Question

2 years ago

9

OCF.

1 answer:

inessss [21] · Answer 1 · 2022-08-11T09:25:00+03:00

Answer:

c. 1 + FC/OCF

Explanation:

Note: The organized question is attached

Degree of Operating Leverage measure the relationship between fixed cost and variable cost.

The other formula of Degree of Operating Leverage = (Sales - Variable cost) / (Sales - Variable cost - Fixed cost).

It can also be written as Degree of operating leverage = Contribution margin / Operating profit.

Now, If we have to use operating cash flow approach, the third formula is the correct option which is [1+Fixed Cost/Operating cash flow].