i want to this question answer of this General accounting question A company has $800,000 fixed costs and $150,000depreciation and expects to generate $300,000 in profits.What is its DOL?a. 3.50b. 3.17c. 4.17d. 3.83

Step 1: Define Degree of Operating Leverage (DOL)The Degree of Operating Leverage (DOL) measures how…

Answered: A company has $800,000 fixed costs and…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 3SEQ: Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of...

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Edmonds Industries is forecasting the following income statement: Sales Operating costs excluding depreciation & amortization EBITDA Depreciation and amortization EBIT Interest $6,000,000 3,300,000 $2,700,000 300,000 $2,400,000 480,000 EBT $1,920,000 Taxes (25%) 480,000 $1,440,000 Net Income The CEO would like to see higher sales and a forecasted net income of $2,720,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 6%. The tax rate, which is 25%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,720,000 in net income? Round your answer to the nearest dollar, if necessary. $

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A company has $800,000 fixed costs and $150,000 depreciation and expects to generate $300,000 in profits. What is its DOL? a. 3.50 b. 3.17 c. 4.17 d. 3.83