At 20,000 skier-days Northlake Nordic Centre Inc. has contribution margin of 420,000 and operating income of 105,000. Compute the degree of operating leverage (one decimal).
At 20,000 skier-days Northlake Nordic Centre Inc. has contribution margin of 420,000 and operating income of 105,000. Compute the degree of operating leverage (one decimal).
Answer
4
Cells - Degree of operating leverage · ±0.05 DOL = CM ÷ operating income = 420,000 ÷ 105,000 = **4.0**. A 10 % change in volume moves operating income 40 % — the L9.6 result, generalised. It is specific to the volume: at 30,000 skier-days it is 2.0.
Hermanson Vol 2 ch 21 (assumptions of CVP); OpenStax Managerial Accounting §3.5 (operating leverage — reference); the recommendation register authored from the paper’s marking scheme (concept map J13, J14)