Interpret the first expected degree of operating leverage

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Reference no: EM131958935

A new cafeteria is ready to open for business at Florida Hospital Orlando. It is estimated that the food cost (variable cost) will be 40% if sales, while fixed cost will be $540,000. The first year’s sales estimates are $1,500,000. The cost of the facility was financed with debt at 4.5%. Interest expense for the first year is expected to be $90,000.

A) Compute and interpret the first expected degree of operating leverage (DOL).

Reference no: EM131958935

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