Brandi's Bakery's Current Degree of Operating Leverage Is 15

question 80

Multiple Choice

Brandi's Bakery's current degree of operating leverage is 15.Additional advertising is expected to increase her sales by 8%.What is the expected impact on operating income?

• A) 12%
• B) 53%
• C) 120%
• D) 187%

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Definitions:

Manufacturing Overhead

All manufacturing costs that are not directly traceable to the product being produced, including costs related to indirect materials, indirect labor, and other indirect expenses.

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities required to produce them, aiming for more accurate cost allocation.

Idle Capacity

Unused production capability in a given period, often resulting in inefficiency and increased costs.

Supervisory Wages

Costs associated with the salaries of supervisory personnel, considered part of manufacturing overhead in production environments.