Daley CoManufactures Computer Monitors

question 19

Essay

Daley Co.manufactures computer monitors.Following is a summary of its basic cost and revenue data: Assume that Daley Co.is currently selling 700 computer monitors per month.Fixed costs are expected to be $96,000.
Required:
1.Calculate Daley Co.'s degree of operating leverage (DOL) if 700 units are sold.Round your answer to 3 decimal places.
2.Define what is meant by the DOL.
3.Of what purpose/value is the DOL to decision makers?

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Definitions:

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company's shares, typically at the discretion of the bondholder.

Issuing Corporation's Stock

The process by which a company offers its shares to the public for the first time or issues additional shares in the market.

Par Value

The face value of a bond or stock as stated by the issuing company, unrelated to market value.

Premium

An amount paid in excess of the nominal or face value, often in relation to insurance or bonds.