-The Degree of Operating Leverage Is:
A) 1

question 103

Multiple Choice

$\begin{array}{lr}\text { Sales }(75,000 \text { units }) & \$ 750,000 \\\text { Variable costs } & \underline{225,000} \\\text { Contribution margin } & 525,000 \\\text { Fixed manufacturing costs } & \underline{187,500}\\\text { Operating income } & 337,500 \\\text { Interest } & \mathbf{7 5 , 0 0 0} \\\text { Earnings before taxes } & 262,500 \\\text { Taxes (at } 31 \% \text { ) } & 81.375\\\text { Net income }&\$181,125\\\text { Shares outstanding }&15,000\end{array}$
-The Degree of Operating Leverage is:

• A) 1.43x.
• B) 1.56x.
• C) 3.33x.
• D) 2.22x.

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Definitions:

Stockholders

Individuals or entities that own shares in a corporation, giving them certain rights like voting on corporate affairs.

Tax Rate

The chunk of financial earnings a corporation or individual pays as tax.

Depreciation Expense

Breaking down the cost of a hard asset over its life of utility.

Comprehensive Income

A measure of all changes in equity of an enterprise during a period, except those resulting from investments by and distributions to owners.