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.

---

Definitions:

External Reporting

The process of preparing and presenting financial and other information to parties outside the organization.

Traditional Format

In accounting, it refers to the conventional way of reporting income statements, segmenting costs into categories like cost of goods sold, operating expenses.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including raw materials, labor, and manufacturing overhead.

Variable Expenses

Costs that vary directly with the level of production or sales volume, such as raw materials and commission fees.