One Way to Compute the Expected Change in Operating Income

question 28

Multiple Choice

One way to compute the expected change in operating income due to a change in sales volume at a given level of sales is to compute

• A)Degree of operating leverage.
• B)High-low analysis.
• C)Scattergraph analysis.
• D)Horizontal analysis.

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Definitions:

Net Value

The difference between the total benefits and total costs associated with an economic activity or transaction.

Long Run Deficit

A fiscal situation where a government consistently spends more than it earns over an extended period, leading to sustained budget deficits.

Nominal Wages

The wages that are paid to employees without adjustment for inflation, representing the dollar amount of the pay before considering purchasing power.