The Lincoln Mint produces various types of one ounce silver commemorative medals for sale to collectors. The cost of producing and selling a given medal is as follows:
What is the degree of operating leverage at an output level of 15,000 units?
A) 0.0
B) 1.0
C) 3.0
D) cannot be determined from the information provided

Question

The Lincoln Mint produces various types of one ounce silver commemorative medals for sale to collectors. The cost of producing and selling a given medal is as follows: 
What is the degree of operating leverage at an output level of 15,000 units?
A) 0.0 
B) 1.0 
C) 3.0 
D) cannot be determined from the information provided

Quizplus · Accepted Answer

Solution:
DOL = [($14 - $10)(15,000)]/[($14 - $10)(15,000) - $40,000] = 3.0

The Lincoln Mint Produces Various Types of One Ounce Silver