Explore BrainMass

Explore BrainMass

    Calculate and analyze the degree of operating leverage

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A project has a fixed cost of $1,000 per year, depreciation charges of $500 a year, revenue of $6,000 a year and variable costs equal to two-thirds of revenues.

    A. If sales increase by 5%, what will be the increase pretax profits

    B. What is the degree of operating leverage of this project

    C. Confirm that the percentage change in profits equals DOL times the percentage of change in sales

    See attached template 8-21

    © BrainMass Inc. brainmass.com June 3, 2020, 5:27 pm ad1c9bdddf