By Multiplying the Operating Leverage Factor by the Anticipated Percentage

question 126

Multiple Choice

By multiplying the operating leverage factor by the anticipated percentage change in volume, one can find

• A)the anticipated change in operating income.
• B)the anticipated change in contribution margin.
• C)the anticipated change in fixed expenses.
• D)the anticipated change in sales revenue.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, typically presented on the income statement.

Incremental Cash Flows

The additional cash flow an entity receives from undertaking a new project or investment.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.

Externality

A consequence of an economic activity experienced by unrelated third parties; it can be positive or negative.