Miller manufacturing's degree of operating leverage is 1.5. warren corporation's degree of operating leverage is 3. warren's earnings would go up (or down by ________ as much as miller's with an equal increase (or decrease in sales.
Warren's earnings would go up (or down) by twice as much as Miller's with an equal increase (or decrease) in sales. The operating leverage is a ratio which describes the relation between the sales, the variable cost, and the fixed cost that used in the production process. 1.5 operating leverage shows that there will be $1.5 increasing in income for each of $1 increase in sales. 3 operating leverage shows that there will be $3 increasing in income for each of $1 increase in sales
