What Is the Degree of Operating Leverage? Sales = 100,000

question 206

Multiple Choice

What is the degree of operating leverage? Sales = 100,000 units; price = $50; variable cost = $30; fixed costs = $950,000; depreciation = $250,000; tax rate = 34%.

• A) 1.06
• B) 1.22
• C) 1.37
• D) 1.63
• E) 2.22

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Definitions:

Articles Of Confederation

First frame of government for the United States; in effect from 1781 to 1788, it provided for a weak central authority and was soon replaced by the Constitution.

Indebted Farmer

An agricultural worker or landowner who owes money, typically as a result of borrowing to finance farming operations or land purchase.

Revolutionary War

A war fought from 1775 to 1783 in which the American colonies successfully gained independence from Great Britain, becoming the United States of America.

Shays's Rebellion

A revolt carried out by American farmers in 1786-1787 against the execution of tax collections and debt judgments by state and local officials.