Answer the Following Question(s)using the Information Below

question 90

Multiple Choice

Answer the following question(s) using the information below.Southwestern College is planning to hold a fund raising banquet at one of the local country clubs.It has two options for the banquet:
Southwestern College has budgeted $1,800 for administrative and marketing expenses.It plans to hire a band which will cost another $800.Tickets are expected to be $30 per person.Local business supporters will donate any other items required for the event.
-What is the degree of operating leverage for both options if 600 people attend?

• A)1.37 and 1.75 times respectively
• B)1.5 times and 1.74 times respectively
• C)1.10 and 1.29 times respectively
• D)0.75 and 1.07 times respectively
• E)Operating leverage is indeterminable.

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Definitions:

Minimum Cash Balance

The lowest amount of cash that a company aims to hold in its accounts to ensure financial stability and meet its operational needs.

Cash Budget

A financial plan that projects future cash flow by estimating incoming cash receipts and outgoing cash payments.

Loans Outstanding

The total amount of borrowed money that is still owed to lenders.

Budgeted Purchases

The estimated amount of purchases a company plans to make in a future period, often part of a budgeting process.