Sally's Optimist Club promotes optimism to the youth in Virginia.If the club has a degree of operating leverage of 3.0 and the sales increase by 25%,then:

Question

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The degree of operating leverage (DOL) is a measure of how a percentage change in sales will affect profits. With a DOL of 3.0, a 25% increase in sales will lead to a 75% increase in profit (3.0 times the percentage increase in sales, which is 25%). Total variable costs are not directly affected by the DOL; they change with the level of production or sales volume, not the leverage.

Sally's Optimist Club Promotes Optimism to the Youth in Virginia