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:

Contribution Format

A type of income statement where costs are divided into variable and fixed, highlighting the contribution margin.

Income Statement

A financial report detailing a company's incomes, costs, and net earnings during a defined timeframe.

Contribution Margin

The amount by which a product's selling price exceeds its total variable costs, contributing towards covering fixed expenses and generating profit.

Unit

A single, distinct item or entity that is a part of a larger group, system, or measure.