Palmer Company Below Is an Income Statement for Palmer Company

question 46

Multiple Choice

Palmer Company Below is an income statement for Palmer Company:
$\begin{array}{ll}\text { Sales } & \$ 400,000 \\\text { Variable costs } & \underline{(125,000) } \\\text { Contribution margin } & \$ 275,000 \\\text { Fixed costs } & \underline{(200,000) } \\\text { Profit before taxes } & \underline{\$ 75,000}\end{array}$ Refer to Palmer Company.What is Palmer's degree of operating leverage?

• A)3.67
• B)5.33
• C)1.45
• D)2.67

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Definitions:

Mistakenly Offers

Incorrect proposals made unintentionally during negotiations or in the course of business transactions.

Intended Price

The price at which a seller aims to sell a product or service, often reflecting costs, market conditions, and profit margins.

Bilateral Mistake

A situation in a contract where both parties are mistaken about a fundamental fact that is central to the contract.

Unforeseen Storm

A sudden and unexpected weather event with potentially destructive effects.