Which of the following figures are incorporated into the Degree of Operating Leverage equation as based on total dollar sales?
I. Sales in dollars -
II. Total variable costs -
III. Average sales price -
IV. Total fixed operating costs -
V. Average variable cost per unit
VI. Number of common shares outstanding
VII. Sales in units -
VIII. Discount rate -
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A. B. C. D. E. F.E
The Degree of Operating Leverage (DOL) measures the percentage change in EBIT that results from a given percentage change in sales. Degree of Operating
Leverage can be calculated using several methods, including equations based upon unit sales and dollar sales. The DOL equation based on dollar sales is illustrated as follows:
{DOL = [(sales in dollars - total variable costs) / (sales in dollars - total variable costs - total fixed operating costs)]. Of the answers provided, only I, II, and IV are incorporated into this equation.