Gandee Company Has an Operating Leverage Factor of 5

question 90

Multiple Choice

Gandee Company has an operating leverage factor of 5. Which of the following statements is true?
Thus, an 8% change in ______ should result in a 40% change in ______. The respective amounts that change are:

• A) An 8% change in income should result in a 40% change in sales revenue.
• B) An 8% change in sales revenue should result in a 40% change in income.
• C) An 8% change in variable costs should result in a 40% change in contribution margin.
• D) An 8% change in fixed costs should result in a 40% change in income.
• E) An 8% change in variable costs should result in a 40% change in break-even sales.

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