Operating Leverage (Managerial Accounting Series)
In this managerial accounting tutorial I discuss what operating leverage is within a company and how operating leverage fluctuates. Operating leverage for a company is calculatd as contribution margin divided by operation income, where the higher number answer will imply that the company is leveraged (uses more fixed costs). The more leverage a company uses, the more fixed costs they have on their books, while the less leveraged a company is, the more variable costs they have on their books and less debit or fixed costs.
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