The Formula for Determining the Degree of Operating Leverage Is $\div$

question 5

True/False

The formula for determining the degree of operating leverage is:
DOL = [Q (P - V)] $\div$ [Q (P - V) - F_C]
The variables have the following meanings and values:
$\begin{array}{lll}\mathrm{P} & =\text { Price per unit } & =\$ 20.00 \\\mathrm{~V} & =\text { Variable cost per unit } & =\$ 16.00 \\\mathrm{Q} & \text { = Monthly quantity sold }& =5,000\\\mathrm{FC}&=\text { Total anmual fixed costs }&=\$180,000\end{array}$ A 5% increase in the firm's sales will lead to a 20% increase in its EBIT.

---

Definitions:

Reinforcement Techniques

Methods used in behaviorism to increase or decrease the likelihood of a specific behavior by adding or removing stimuli following the behavior.

B F Skinner

A psychologist and behaviorist known for his work on operant conditioning, emphasizing the role of reinforcement and punishment.

Unconscious Mind

Part of the mind that is not immediately accessible to conscious awareness, containing thoughts, memories, and desires that lie outside personal consciousness.

Sigmund Freud

A neurologist and the founder of psychoanalysis, a method for treating psychological pathology by means of dialogue between a patient and a psychoanalyst.