A Firm Is Reviewing a Project That Has Fixed Costs

question 167

Multiple Choice

A firm is reviewing a project that has fixed costs of $123,500, variable costs of $189,700, sales of $427,600, and a 34% marginal tax rate. The project has no initial cash requirements. What is the degree of operating leverage for this project?

• A) .61
• B) 1.22
• C) 1.61
• D) 1.64
• E) 2.64

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Definitions:

Sales Management

The process of planning, directing, and controlling the sales activities of an organization to achieve sales objectives and contribute to the company's profitability.

AI

Artificial Intelligence, the simulation of human intelligence processes by machines, especially computer systems, involving learning, reasoning, and self-correction.

Algorithms

Step-by-step procedures or formulas for solving problems or completing tasks, often used in computing and mathematical processes.

Adaptive Selling

The practice of customizing sales approach to the specific needs and behaviors of individual customers or situations.