Stromburg Corporation Makes Surveillance Equipment for Intelligence Organizations

question 4

Multiple Choice

Stromburg Corporation makes surveillance equipment for intelligence organizations.Its sales are $75,000,000.Fixed costs,including research and development,are $40,000,000,while variable costs amount to 30% of sales.Stromburg plans an expansion which will generate additional fixed costs of $15,000,000,decrease variable costs to 25% of sales,and also permit sales to increase to $100,000,000.What is Stromburg's degree of operating leverage at the new projected sales level?

• A)3.7500
• B)3.9375
• C)4.1344
• D)4.3411
• E)4.5581

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Definitions:

Jean Piaget

A pivotal figure in developmental psychology who introduced the concept that children progress through a series of cognitive developmental stages.

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Possible explanations for phenomena, used to predict the outcome of research.

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Coherent set of logically related concepts that seeks to organize, explain, and predict data.

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A systematic investigation and study of materials and sources in order to establish facts and reach new conclusions.