Table 15-7 Sally Owns the Only Shoe Store in Town. She Has

question 39

Multiple Choice

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information.
-Refer to Table 15-7. What is the average revenue when Sally sells 7 pairs of shoes?

• A)$40
• B)$90
• C)$100
• D)$700

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Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales over the short term, such as rent, salaries, and insurance.

Break-even Point

The break-even point is the sales level at which total revenues equal total costs, resulting in neither profit nor loss.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to its sales volume, showing the impact of fixed costs on earnings.

Net Operating Income

A measure of a company's profitability, calculated by subtracting operating expenses from gross profit, not including non-operating income and expenses, interest, and taxes.