Degree of Operating Leverage Is Calculated as

question 24

Multiple Choice

Degree of operating leverage is calculated as

• A) Variable costs/Sales
• B) Total sales/Common fixed costs
• C) Fixed costs/Variable costs
• D) Contribution margin/Operating income
• E) Operating income/Contribution margin

Recognize the liability of promoters and incorporators in relation to preincorporation contracts and after incorporation.

Describe the process and significance of the secretary of state's approval of articles of incorporation.

Identify the concept of watered shares and the responsibility of the board of directors in share valuation.

Explain the process of capitalizing a newly formed corporation, including issuing equity and debt securities.

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Definitions:

Manufacturing Business

A company engaged in the production of goods by processing raw materials into finished products.

Merchandising Business

A type of business that purchases goods for resale to customers, making profits from the markup over the cost of goods sold.

Limited Liability Company

An organizational form blending the direct tax system of a sole proprietorship or partnership with the reduced liability features of a corporation.

Cost Concept

An accounting principle that states all assets and services purchased by a company should be recorded at their cost price.