write:* $240 000 x 1.5 = $360 000 •If expected sales were to increase to 6 000 units a 20% increase then profits would increase by 2.5 x 20% or 50% to $360 000. * •If expected sa

2e Slide # 33 Q5: Using the Degree of Operating Leverage •The degree of operating leverage shows the sensitivity of profits to changes in sales. ةيساسح ةيليغشتلا ةعفارلا ةجرد رهظتوتاعيبملا يف تاريغتلل حابرلأا. •On the prior slide Bill’s degree of operating leverage was 2.5 and profits were $240
000. * $240
000 x 1.5 = $360
000 •If expected sales were to increase to 6
000 units
a 20% increase
then profits would increase by 2.5 x 20%
or 50%
to $360
000.* •If expected sales were to decrease to 4
500 units
a 10% decrease
then profits would decrease by 2.5 x 10%
or 25%
to $180
000.** ** $240
000 x 0.75 = $180
0