Sara Lee Has Noted That Every Time the Sales Quantity

question 408

Multiple Choice

Sara Lee has noted that every time the sales quantity increases by 5 percent for a particular project, the operating cash flow for the project increases by 8 percent. What is the degree of operating leverage for this project if the contribution margin is $2.50?

• A) .40
• B) .63
• C) .71
• D) 1.40
• E) 1.60

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