Degree of Operating Leverage EXAMPLE

Degree of Operating Leverage EXAMPLE - Operating Leverage...

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Operating Leverage EXAMPLE Assume: P = $2.00/unit, Q ˆ = 50 units Alternative levels of Q: Q' = 40 units (20% decrease) Q'' = 60 units (20% increase) Technology 1(T1) Technology 2 (T2) V = $1.20/unit V = $0.60/unit F = $28 F = $55 Q b1 = 20 . 1 00 . 2 28 - = 35 units Q b2 = 60 . 00 . 2 55 - = 39.3 units Expected Alternate Levels of Sales 20XX 20XX' % 20XX'' % T1: Sales $100 $80 -20% $120 20% VC - 60 - 48 " - 72 " CM
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This note was uploaded on 08/22/2009 for the course FIN 3310 taught by Professor Potts during the Spring '08 term at Baylor.

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