The concept of operating leverage, reviewed in this problem, is covered in the Chapter 5
The concept of operating leverage, reviewed in this problem, is
covered in the Chapter 5 Supplement.) Review the walk-in clinic data
presented in Problem 5.5. Construct projected P&L statements at
volume levels of 8,000, 9,000, 10,000, 11,000, and 12,000 visits.
- Assume that the base case forecast is 10,000 visits. What is the
clinic's degree of operating leverage (DOL) at this volume level?
Confirm the net incomes at the other volume levels using the
DOL combined with the percent changes in volume.