Iverson Corporation's Variable Expenses Are 60% of Sales

question 221

Multiple Choice

Iverson Corporation's variable expenses are 60% of sales. At a $400,000 sales level, the degree of operating leverage is 5. If sales increase by $40,000, the new degree of operating leverage will be (rounded) :

• A) 3.67
• B) 2.86
• C) 5.25
• D) 5.00

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Definitions:

Stimulants

Substances that increase activity in the brain and nervous system, enhancing alertness and energy.

Depressants

Substances that reduce the activity of the central nervous system, leading to effects such as relaxation, reduced anxiety, and sleepiness.

Narcotics

Narcotics are drugs that relieve pain and can induce sleep, but also have potential for dependency and abuse.

Planning

The process of thinking about and organizing the activities required to achieve a desired goal, involving foresight and strategic decision-making.