Morse Company Reports Total Contribution Margin of $48,000 and Pretax

question 112

Multiple Choice

Morse Company reports total contribution margin of $48,000 and pretax net income of $12,000 for the current month.The degree of operating leverage is:

• A)4.0
• B)0.25
• C)1.25
• D)2.5
• E)250%

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Definitions:

Contingent Payment

A payment that depends on achieving certain conditions or outcomes in the future.

Market Value

The current quoted price at which an asset or a company can be bought or sold on the open market.

Probability-Weighted

A method that takes into account the likelihood of various outcomes, often used in financial forecasting and risk assessment to estimate future cash flows or earnings.

Time Value

The concept in finance that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.