Degree of Operating Leverage (DOL) Is Defined as Total Contribution

question 96

True/False

Degree of operating leverage (DOL) is defined as total contribution margin in dollars divided by pretax income.

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Definitions:

Ending Finished Goods

The inventory of goods that are completed and ready for sale at the end of an accounting period.

Sales

The total amount of goods or services sold by a business during a particular period.

Early Warning System

A system designed to detect early signs of risk or failure, allowing for preemptive action.

Top Management

The highest level of management in an organization, including positions such as CEO, CFO, and COO, responsible for overall strategy and direction.