Sebree Corporation Has Provided the Following Contribution Format Income Statement

question 9

Multiple Choice

Sebree Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.

-Using the degree of operating leverage,the estimated percent increase in net operating income as the result of a 5% increase in sales is closest to:

• A) 0.29%
• B) 87.50%
• C) 0.11%
• D) 218.75%

---

Definitions:

Subsidiary Factory Overhead Ledger

A specialized ledger that tracks all the indirect manufacturing costs associated with a company's production process.

Direct Materials

Raw materials and components that are directly used in the production of a product, which can be easily traced and assigned to specific goods.

Direct Labor Costs

Expenses associated with employees who are directly involved in the production of goods or services.

Factory Overhead Account

An account that accumulates all indirect costs associated with manufacturing operations, not directly tied to specific units.