Operating leverage= (revenue-variable cost)/ (revenue -variable cost- fixed operating Taking customers = 3000000000 and price as 20 and net income as flat over the years Operating leverage for 1940s = 3000000(20-15)[3000000(20-15)-2000000]=15000000/ (13000000)=1.153 8(approx) Operating leverage for 1980s = 3000000(20-7)/[3000000(20-7)-5000000]=39000000/ (34000000)=1.1471(approx) Therefore, I can say that change in the cost structure has reduced Billot's operating leverage. A high operating leverage means proportion of variable costs is higher compared to fixed costs. Less no of customers are required to cover total costs. Therefore a high operating leverage results in lower profits and a low operating leverage leads to higher profits. As operating leverage has reduced during 1980s, it can be concluded that profitability has increased during that period. The shift from human operators to mechanical devices increased Bitllot's operating leverage, which means that if sales increase, the percentage increase in before-tax profits will exceed the percentage increase in sales. Conversely, if sales decrease, the percentage decrease in profits will exceed the percentage decrease in sales