Question

The degree of operating leverage may be defined as

A. the percent change in operating income divided by the percent change in unit volume.

B. Q(P - VC) divided by Q(P - VC) - FC.

C. S - TVC divided by S - TVC - FC.

D. All of the options

Answer 1

The degree of operating leverage is the percent change in operating income divided by the percent change in unit volume.

Step-by-step explanation:

The degree of operating leverage can be defined as the percent change in operating income divided by the percent change in unit volume. This is represented by option A in the question. The degree of operating leverage measures the sensitivity of operating income to changes in sales volume. It indicates the extent to which a company's operating income will change in response to a change in sales.