The Following Income Statement Is Provided for Vargas,Inc What Is This Company's Magnitude of Operating Leverage?
A) 3

question 47

Multiple Choice

The following income statement is provided for Vargas,Inc. $$\begin{array} { | l | r | } \hline \text { Sales reverue } ( 2,500 \text { urits } \mathrm { x } \$ 60 \text { per urit) } & \$ 150,000 \\\hline \text { Cost of goods sold (varable; } 2,500 \text { urits } \times \$ 20 \text { per urit) } & ( 50,000 ) \\\hline \text { Cost of goods sold (fived) } & ( 8,000 ) \\\hline \text { Gross margin } & 92,000 \\\hline \text { Admiristrative salaries } & ( 42,000 ) \\\hline \text { Depreciation } & ( 10,000 ) \\\hline \text { Supplies } ( 2500 \text { units } \times \$ 4 \text { per urit) } & ( 10,000 ) \\\hline \text { Net income } & \$ 30,000\\\hline \end{array}$$ What is this company's magnitude of operating leverage?

• A) 3.07
• B) 0.33
• C) 3.00
• D) 1.67

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Definitions:

Vendor Rating System

A method used by companies to evaluate and rate the performance of their suppliers.

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Value Analysis

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