Degree of Operating Leverage

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Description

A measure, at a given level of sales, of how a percentage change in sales will affect profits. The degree of operating leverage is computed by dividing contribution margin by net operating income.

Concept Prerequisite

Wikipedia Reference

http://en.wikipedia.org/wiki/Operating leverage

Learning Material

Covered in Topic(s)

 
Cost Theory and Estimation
Cost-Volume Profit Relationships
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