The degree of operating leverage (DOL) can be measured by the percent change in operating income (EBIT) divided by percent change in:
A) fixed costs
B) variable costs
C) unit sales
D) total costs

Question

Quizplus · Accepted Answer

The degree of operating leverage (DOL) measures the sensitivity of EBIT to changes in unit sales. It is calculated by dividing the percent change in EBIT by the percent change in unit sales. Therefore, the correct choice is C, unit sales.

The Degree of Operating Leverage (DOL) Can Be Measured by the Percent