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Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins
Edition 6ISBN: 978-0078025532Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins
Edition 6ISBN: 978-0078025532 Exercise 33
Degree of Operating Leverage (DOL) The following sales and cost data (000s) are for two companies in the transportation industry:
Required
1. Calculate the degree of operating leverage (DOL) for each company. If sales increase from the present level, which company benefits more How do you know
2. Assume that sales rise 10% in the next year but that everything else remains constant. Calculate the percentage increase in profit for each company. Are the results what you expected Explain.
3. In what sense is DOL a measure of risk
Required
1. Calculate the degree of operating leverage (DOL) for each company. If sales increase from the present level, which company benefits more How do you know
2. Assume that sales rise 10% in the next year but that everything else remains constant. Calculate the percentage increase in profit for each company. Are the results what you expected Explain.
3. In what sense is DOL a measure of risk
Explanation
Verified
Verified
1.
Degree of leverage is the ratio of Co...
Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins
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