Question

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Colculate operating leverage
from the following cata.
RS5ooooo
Variable Cost RS 30000
Fixed Cost Rs looooo
Sales​

Answer 1

Explanation:

KEY TAKEAWAYS:

The DOL is a measure that reflects the change in a company's operating income after a percentage change in its sales.

The DOL reflects the operating risk a company faces as a result of the structure of its fixed and variable costs.

A high degree of operating leverage indicates that a company is likely to experience volatility in its earnings with a change in its sales because it has a large proportion of fixed costs in its total costs.

A low degree of operating leverage implies that a company has a high proportion of variable costs, and the company does not have to dramatically increase sales to cover its lower fixed costs.

Understanding the Degree of Operating Leverage

The degree of operating leverage quantifies a company’s operating risk that is a result of the structure of fixed and variable costs. Fixed costs do not change based on production, so a company cannot use them to adjust its operating costs to affect its sales. Therefore, operating risk rises with an increase in the proportion of fixed-to-variable costs.

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Answer 2

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○ Digestion of food is an example of chemical change. Digestion is considered as chemical change because enzymes in the stomach and intestines break down large macro-molecules into simpler molecules so that the body can absorb the food easily.