The degree of operating leverage (DOL) can be measured by the percent change in operating income (EBIT) divided by percent change in:

Question

Quizplus · Accepted Answer

The degree of operating leverage (DOL) is a measure of how sensitive operating income (EBIT) is to a change in sales. It is computed by dividing the percent change in EBIT by the percent change in unit sales. Therefore, the best choice is C - unit sales. A and D are incorrect because fixed and total costs are not directly related to operating leverage, while B is incorrect because the DOL uses EBIT, which is impacted by changes in both fixed and variable costs.

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