Variable cost per unit decreases because of increases in
productivity.
Both revenues and total costs are linear.
Question 8. Question : The degree of operating leverage
(DOL), at any sales volume, is
equal to:
Student Answer:
(Operating profit - fixed expenses) ÷ sales.
(Sales - variable expenses) ÷ operating profit.
Operating profit ÷ (fixed expenses - variable expenses).
Sales ÷ (fixed expenses - operating profit).
Fixed costs ÷ Total contribution margin.
Question 9. Question : Sales forecasts are the first step in the
budgeting process of a
merchandising firm because:
Student Answer:
The revenue data are easiest to generate.
Sales information is precise in amount.