Contribution margin is divided to operate income to calculate degree of operating leverage. The Degree of Operating Leverage (DOL) is the leverage ratio that sums up the effect of an amount of operating leverage on the company's earnings before interests and taxes (EBIT).
If total units of product A, B and C are as 200,300 and 400 respectively then sales mix would be
Difference between actual result and corresponding amount of flexible budget, on basis of actual level of output is classified as flexible budget variance. A flexible budget variance is any difference between the results generated by a flexible budget model and actual results. If actual revenues are inserted into a flexible budget model, this means that any variance will arise between budgeted and actual expenses, not revenues.