Which of the following statements regarding degree of operating leverage (DOL) is correct?
A) DOL is considered to be a percentage of sales revenues.
B) DOL is considered to be a multiplier.
C) DOL is calculated as net income divided by sales revenues.
D) DOL is calculated as operating income divided by variable costs.

Question

Quizplus · Accepted Answer

The degree of operating leverage (DOL) is a multiplier that acts on changes in sales and is determined by dividing contribution margin by operating income.

Which of the Following Statements Regarding Degree of Operating Leverage