Degree of operating leverage (DOL) measures the sensitivity of OCF in response to changes ofThe higher the DOL, thethe volatility of a firm's operating income.Select one:a. sales quantity; lowerO b. sales quantity; higherO c.fixed costs; lowerO d. fixed costs; higherO e. variable costs; higher

We have formula,Degree of operating leverage(DOL) = % change in operating income/% change in sales

Answered: Degree of operating leverage (DOL)…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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IA Cost is divided by the change in units. CLEAR MY CHOICE Which of the following statements about operating leverage is false? O a. If the degree of operating leverage higher for a company, this means that the company is more risky than another company with low degree of operating leverage. O b. Operating leverage measures how operating income will be affected by changes in sales O C. All of the given answers are true. O d. The degree of operating leverage is higher for companies with higher fixed costs O e. Keeping all factors constant, the higher the contribution margin, the lower the operating leverage. NEXT PAG GE ere to search
Which of the following statements about operating leverage is false? O a. All of the given answers are true. O b. Keeping all factors constant, the higher the contribution margin, the higher the operating leverage. OC. Operating leverage measures how operating income will be affected by changes in sales O d. If the degree of operating leverage higher for a company, this means that the company is more risky than another company with low degree of operating leverage. The degree of operating leverage is higher for companies with lower fixed costs O e.
A very high degree of operating leverage (DOL) indicates that a firm: A. has high fixed costs.B. has a high net income.C. has high variable costs.D. is operating close to its breakeven point.
Which of the following costs are always incremental and relevant in decision analysis? a) Opportunity costs and sunk costs b) Avoidable costs and opportunity costs c) Only avoidable costs d) Avoidable costs and sunk costs Which of the following will increase a company's breakeven point? a) reducing its total fixed costs b) increasing the selling price per unit c) increasing variable cost per unit d) increasing contribution margin per unit
Which of the following statements about CVP analysis is false? O a. Operating income calculations in CVP analysis are based on contribution margin not gross margin. O b. Unit selling price, unit variable costs, and total fixed costs are known and remain constant. O c. Managers use (CVP) analysis to study the behavior of and relationship among the elements such as total revenues, total costs, and income O d. Total revenues and total costs are linear in relation to output units. O e. All of the given answers are true. OUS PAGE FINISH ATTEMPT ... F1 F2 F3 F4 F5 F6 F7 F8 F10 23 % & 2 3 4 7 8. V Q W T A F K 13 C V BYNI M 24 S
When the total contribution margin is greater than total fixed costs, a company has Select one: a. Higher variable cost and fixed cost. b. A net loss c. Zero profit. d. Net income.
Consider the following duopoly model and determine profit - maximizing output and price for q_1+ q 2 TC_1 = 10 q_(1) TC_2 = 10 q_2 each firm. P = 200 - Q Industry Demand Q =

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