Degree of operating leverage: The Degree of operating leverage shows the relation between change in net operating income and change in sales. The formulas for degree of operating leverage are as follows: D e g r e e o f o p e r a t i n g l e v e r a g e = C o n t r i b u t i o n M a r g i n O p e r a t i n g i n c o m e C h a n g e i n o p e r a t i n g i n c o m e = C h a n g e s i n s a l e s × D e g r e e o f o p e r a t i n g l e v e r a g e To Calculate: The Degree of operating leverage

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Chapter 11, Problem 5SEQ

To determine

Concept Introduction:

Degree of operating leverage:

The Degree of operating leverage shows the relation between change in net operating income and change in sales. The formulas for degree of operating leverage are as follows:

Degree of operating leverage = Contribution MarginOperating income

Change in operating income = Changes in sales ×Degree of operating leverage

To Calculate:

The Degree of operating leverage

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