When calculating the degree of operating leverage...is depcreciation considered a fixed cost?

Question

When calculating the degree of operating leverage...is depcreciation considered a fixed cost?

Answer 1

that's a toughy.  i want to say that in general, yes.

b/c if you have X amount of fixed assets, and don't purchase any throughout the year, and are depreciating them using the straight-line basis, then those are fixed costs.

but if you're making capital expenditures, your depreciation costs will rise.  or if you sell equipment,etc, your depr costs will drop.

in the real world, different people calculate fixed costs different ways, and accounting treatment tends to be homogenous within industries.