If a company would like to increase its degree of operating leverage it should ________.
A) increase its sales relative to its fixed costs
B) increase its sales relative to its variable costs
C) increase its variable costs relative to its fixed costs
D) increase its fixed costs relative to its variable costs

Question

Quizplus · Accepted Answer

Increasing the degree of operating leverage involves increasing fixed costs relative to variable costs. This means that as sales increase, a larger portion of revenue contributes to profit, amplifying the effect of sales volume changes on earnings.

If a Company Would Like to Increase Its Degree of Operating