Daley Co. manufactures computer monitors. Following is a summary of its basic cost and revenue data: Assume that Daley Co. is currently selling 700 computer monitors per month. Fixed costs are expected to be $96,000.
Required:
1. Calculate Daley Co.'s degree of operating leverage (DOL) if 700 units are sold. Round your answer to 3 decimal places.
2. Define what is meant by the DOL.
3. Of what purpose/value is the DOL to decision makers?

Question

Daley Co. manufactures computer monitors. Following is a summary of its basic cost and revenue data:  Assume that Daley Co. is currently selling 700 computer monitors per month. Fixed costs are expected to be $96,000.
Required:
1. Calculate Daley Co.'s degree of operating leverage (DOL) if 700 units are sold. Round your answer to 3 decimal places.
2. Define what is meant by the DOL.
3. Of what purpose/value is the DOL to decision makers?

Quizplus · Accepted Answer

The Answer of Daley Co. manufactures computer monitors. Following is a summary of its basic cost and revenue data:  Assume that Daley Co. is currently selling 700 computer monitors per month. Fixed costs are expected to be $96,000.
Required:
1. Calculate Daley Co.'s degree of operating leverage (DOL) if 700 units are sold. Round your answer to 3 decimal places.
2. Define what is meant by the DOL.
3. Of what purpose/value is the DOL to decision makers?

Daley Co Manufactures Computer Monitors