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Degree of Operating Leverage

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A proposed project has fixed costs of $73,000 per year. the operating cash flow at 8,000 units is 87,500. Ignoring the efect of taxes, what is the degree of operating leverage? If units sold rise from 8,000 to 8,500, what will be the increase in operating cash flow? What is the new degree of operating leverage?

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The solution computes degree of operating leverage for a proposed project.

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Degree of Operating Leverage (DOL)= Total Contribution/Operating Income = Total Contibution/(Total Contribution-Fixed ...

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