DOL Example

# DOL Example - Example#2:DOL=4 A1% (EBIT...

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Example #2: DOL = 4 1% increase in sales  will result in a  4%   increase in operating income (EBIT) . If we have the data, we can use this formula: Falcone, Inc. has a base level of sales of  150,000 units .  Sales  price per unit is  \$10  and variable cost per unit is  \$6.50 .  Total  annual operating fixed costs are  \$155,000  and annual interest  expense is  \$90,000 .  What is the degree of operating leverage  for Falcone, Inc.? Falcone, Inc. has a base level of sales of  150,000 units .  Sales  price per unit is  \$10  and variable cost per unit is  \$6.50 .  Total  annual operating fixed costs are  \$155,000  and annual interest  expense is  \$90,000 .  What is the degree of operating leverage  for Falcone, Inc.? Epsland, Inc. has a base level of sales of  250,000 units .  Sales  price per unit is  \$15  and variable cost per unit is  \$7.25 .  Total  annual operating fixed costs are  \$185,000  and annual interest

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## This note was uploaded on 11/21/2011 for the course BUS M 301 taught by Professor Jimbrau during the Summer '11 term at BYU.

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DOL Example - Example#2:DOL=4 A1% (EBIT...

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