Use the Information Below to Answer the Following Question(s)

question 159

Multiple Choice

Use the information below to answer the following question(s) .
Julia's Catering has a monthly target operating income of $6,000. Variable expenses are 40% of sales and monthly fixed expenses are $3,600.
-What is Julia's operating leverage factor at the target level of operating income?

• A) 0.63
• B) 0.40
• C) 1.60
• D) 2.67

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Definitions:

Total Cost

The sum of fixed and variable costs incurred by a business in producing a particular level of output.

Residual Demand Curve

The demand that remains for a firm's product after accounting for the demand captured by competitors in the market.

Supply Function

The mathematical relationship showing the quantity of a good or service that producers are willing to sell at each possible price.

Market Demand Curve

A graphical representation that shows the quantity of a product that consumers are willing and able to buy at various prices.