Assuming No Change in Cost Behaviour as Volume Increases, DOL

question 102

Multiple Choice

Assuming no change in cost behaviour as volume increases, DOL will decrease
June CM = 8,000 * 10.30 = 82,400 DOL = 82,400/(82,400 - 80,000) = 34.33.
For July = (10,000 * 10.30) /(10,000 * 10.30 - 80,000) = 4.477.

-The degree of operating leverage for July is closest to which of the following?

• A) 4.48.
• B) 3.48.
• C) 4.22.
• D) 8.70.

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Definitions:

Security Interest

A legal right or claim on assets granted to creditors to secure loan repayments, typically collateralized by the asset itself.

Perfected

Refers to the completion of all necessary legal steps or procedures to enforce rights, often used in the context of securing interests in collateral under law.

Possession

The act of having physical control over property or goods, with or without the right to own them.

Prescribed Hold-Back

A specific amount of money withheld from a contractor to ensure all obligations are met before full payment.