If a company has a degree of operating leverage of 2.0,that means a 20% increase in sales will result in a 40% increase in variable costs.

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A degree of operating leverage of 2.0 means a 20% increase in sales will result in a 40% increase in operating income, not variable costs. Operating leverage measures the impact of sales changes on operating income, not on variable costs.

If a Company Has a Degree of Operating Leverage of 2.0,that