A Firm Has Fixed Operating Costs of $650,000, a Sales

question 86

Multiple Choice

A firm has fixed operating costs of $650,000, a sales price per unit of $20, and a variable cost per unit of $13. At a base sales level of 500,000 units, the firm's degree of operating leverage is ________.

• A) 1.07
• B) 1.11
• C) 1.18
• D) 1.23

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Definitions:

Chromosomes

Rod-shaped portions of DNA that are organized in 23 pairs.

Gametes

Reproductive cells (sperm and oocytes) that contain half the genetic material of an organism, which unite during fertilization to form a new organism.

Zygote

The new cell formed by the process of fertilization.

Fertilization

The process by which a sperm and an ovum—the male and female gametes, respectively—join to form a single new cell.