Daley Co Manufactures Computer Monitors

question 20

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?

---

Definitions:

Optimum

The most favorable condition or level that achieves the best possible outcome or efficiency.

Good X

A placeholder term for any specific good, product, or item within economic analysis.

Good Y

A hypothetical product or item, often used in economic models and theories to illustrate various economic principles and interactions.

Pepsi

A carbonated soft drink produced and manufactured by PepsiCo, known worldwide and serving as a major competitor to Coca-Cola.