Question: Operating leverage is often measured as the percentage increase in profits after depreciation for a 1 percent increase in sales. a. Calculate the operating leverage

Operating leverage is often measured as the percentage increase in profits after depreciation for a 1 percent increase in sales.

a. Calculate the operating leverage for the electric scooter project assuming unit sales are 100,000 (see Section 10.1).

b. Now show that this figure is equal to 1 + (fixed costs/profits) including depreciation, divided by profits.

c. Would operating leverage be higher or lower if sales were 200,000 scooters?

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