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Calculate abc company degree of operating leverage

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Reference no: EM133189063

Question - ABC Company manufactures computer monitors. Following is a summary of its basic cost and revenue data:

 

Per Unit

Percent

Sales price

$ 580

100

Variable costs

348

60

contribution margin

$ 232

40

Assume that ABC Company is currently selling 700 computer monitors per month. Fixed costs are expected to be $96,000.

Required -

1. Calculate ABC Company's degree of operating leverage (DOL) if 700 units are sold.

2. Define what is meant by the DOL.

3. Of what purpose/value is the DOL to decision makers?

Reference no: EM133189063

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