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Calculate the difference between the sales and operating

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Reference no: EM131759278

Looking to calc the DOL, I'm supposed to calculate the difference between the sales and operating income for each year separately:

Year 1: sales of $25000 Year 2: sales $40000

variable costs of $13000 variable cost of $15000

Operating income $16000 Operating income $16000

So far I'm at a DOL of 1.71 for year 1, and 1.56 for year 2. Am I missing something by using contribution margin/operating income to determine the DOL?

Reference no: EM131759278

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