If Sales Are $400,000, Variable Costs Are 80% of Sales

question 93

Multiple Choice

If sales are $400,000, variable costs are 80% of sales, and operating income is $40,000, what is the operating leverage?

• A) 0.0
• B) 7.5
• C) 2.0
• D) 1.3

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Definitions:

Glucose

An essential sugar that acts as a vital source of energy for living organisms and is included in multiple carbohydrate compounds.

Nonpathological

Relating to a state that is not indicative of a disease or disorder.

Urobilinogen

A substance formed from the reduction of bilirubin, found in the intestines, and can be excreted in the urine or feces, acting as an indicator of liver function.

Cirrhosis

A chronic liver disease marked by degeneration of liver tissue, often caused by long-term alcohol abuse or hepatitis infection.