Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 10DQ: What does operating leverage measure, and how is it computed?
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Question
What is operating leverage, and for what is it used?
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Operating Leverage is a cost-accounting formula used to measure the growth of its operating income. Operating Leverage is found by dividing the Sales by Earnings before Interest and Tax.
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