What Is the Degree of Operating Leverage for Flippin' Out

question 60

Multiple Choice

What is the degree of operating leverage for Flippin' Out Company, a maker of scuba flippers, if the firm sells its finished product for $50 per unit with variable costs per unit of $15? The company has fixed operating costs of $2,000,000 and sells 200,000 units. (The answer is rounded.)

• A) 2.0
• B) 3.7
• C) 6.5
• D) 1.4

Understand the purpose and process of preparing financial statements from the adjusted trial balance.

Recognize the classification and treatment of asset, liability, and equity accounts in financial statements.

Appreciate the role and mechanics of adjusting and closing entries in the accounting cycle.

Identify the characteristics and classification of assets, liabilities, and equity on the balance sheet.

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Definitions:

Medical Care Expenses

The costs associated with seeking and receiving health care services, including diagnostics, treatments, medications, and hospital stays.

Social Status

The position or rank of a person or group within society, often determined by wealth, occupation, or family lineage.

Financially Rich

Describes individuals or entities possessing significant monetary resources, assets, or wealth.

Education Level

The highest degree or level of school completed by an individual, often used as a measure of socio-economic status and predictor of health outcomes.