One Way to Compute the Expected Change in Operating Income

question 156

Multiple Choice

One way to compute the expected change in operating income due to a change in sales volume at a given level of sales is to

• A)compute the degree of operating leverage.
• B)perform high-low analysis.
• C)perform scattergraph analysis.
• D)perform horizontal analysis.

---

Definitions:

Price Inelastic

Describes a situation where the quantity demanded of a good does not significantly change when its price changes.

Agricultural Products

Are commodities produced through farming and agriculture, including food, fibers, and raw materials.

Food Purchases

Transactions involving the buying of food products, either for immediate consumption or storage, by individuals, businesses, or institutions.

Income Inelastic

Describes a good or service whose demand does not significantly change with a change in consumers’ income.