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:

Financial Statements

Documents that present the financial activities and conditions of a business or individual, including balance sheets, income statements, and cash flow statements.

Liabilities

Financial obligations or debts owed by a business to external parties or individuals, which must be repaid at a future date.

Wages Owed

The total amount of compensation that a company owes to its employees for work performed but not yet paid.

Cash Account

A ledger account that represents the amount of cash a company has on hand at any given time.