Assume Total Sales of $800,000, Total Variable Costs of $400,000

question 176

Multiple Choice

Assume total sales of $800,000, total variable costs of $400,000, and total fixed costs of $300,000.Of these amounts, $200,000 of the variable costs are product costs, and $100,000 of the fixed costs are period costs.What is the degree of operating leverage?

• A)0.25
• B)8.00
• C)2.00
• D)4.00

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Definitions:

Parameters

Statistical or mathematical conditions and variables that define the scope and functioning of a model, equation, or procedure.

Level of Significance

A threshold in hypothesis testing that determines the probability at which the null hypothesis is rejected.

Type I Error

The incorrect rejection of a true null hypothesis, also known as a "false positive," indicating a test's incorrect indication of a significant effect.

Available-For-Sale Securities

Financial assets that are neither classified as held for trading nor held to maturity, and are recorded at fair value with unrealized gains or losses reported in other comprehensive income.