Iverson Corporation's Variable Expenses Are 60% of Sales

question 221

Multiple Choice

Iverson Corporation's variable expenses are 60% of sales. At a $400,000 sales level, the degree of operating leverage is 5. If sales increase by $40,000, the new degree of operating leverage will be (rounded) :

• A) 3.67
• B) 2.86
• C) 5.25
• D) 5.00

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Definitions:

Internship Program

A structured and supervised professional experience provided by an organization for a limited period, often for students or recent graduates.

Capital Stock

The total physical, non-human assets of a company or economic system used in the production of goods and services.

Retail Value

The price at which goods are sold to the final consumer, inclusive of markups by retailers.

Directly

In a straightforward or unmediated way, often referring to a direct cause and effect relationship or manner of communication.