(a)
Concept introduction:
Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.
When the two businesses are compared, the business with highest sale, highest gross profit margin and lower variable cost is more beneficial.
To compute:
The operating leverage of R and A.
(b)
Concept introduction:
Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.
To compute:
The reason that the companies with the same total sales and net operating income can have different degrees of operating leverage.
(c)
Concept introduction:
Operating leverage is a cost-accounting formula which shows the percentage or degree increase in the operating income if a company increases its revenue or sale quantity.
Both companies’ vulnerability to market fluctuations.
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Loose-leaf For Managerial Accounting
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