Question

The degree of operating leverage may be defined as Group of answer choices the percent change in operating income divided by the percent change in unit volume.

a.Q(P − VC) divided by Q(P − VC) − FC.
b.S − TVC divided by S − TVC − FC.
c.All of the options are true.

Answer 1

The degree of operating leverage is calculated as (S – TVC) divided by (S – TVC - FC), where S represents sales, TVC represents total variable costs, and FC represents fixed costs.

Step-by-step explanation:

The correct definition of the degree of operating leverage is option b. It is calculated as (S – TVC) divided by (S – TVC - FC), where S represents sales, TVC represents total variable costs, and FC represents fixed costs.