A Firm Has Fixed Operating Costs of $650,000, a Sales

question 101

Multiple Choice

A firm has fixed operating costs of $650,000, a sales price per unit of $20, and a variable cost per unit of $13. At a base sales level of 500,000 units, the firm's degree of operating leverage is_________.

• A) 1.11
• B) 1.23
• C) 1.07
• D) 1.18

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Definitions:

Behavior

Actions or reactions of an individual or group in response to external or internal stimuli.

Remittitur

A court-ordered reduction of an excessive jury verdict in a civil case.

Trial Court

The court where a case is initially tried, involving presentation of evidence and witness testimony before a judge or jury for a verdict.

Prima Facie

Latin for 'at first sight,' it refers to evidence or facts that are sufficient to prove a case or establish a claim unless disproven by other evidence.