Woods Company Originally Expected to Earn Operating Income of $150,000

question 102

Multiple Choice

Woods Company originally expected to earn operating income of $150,000 next year. Woods's degree of operating leverage is 2.4. Recently, Woods revised its plans and now expects to increase sales by 20% next year.
-Refer to the Figure.What is Woods's revised expected operating income for the coming year?

• A)$62,400
• B)$130,000
• C)$156,000
• D)$222,000

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Definitions:

Operating Activities

Activities related to the primary operations of a company, including cash flows from sales, supply purchases, and payroll.

Equipment Purchases

Transactions involving the acquisition of physical assets for use in the production or supply of goods and services, typically considered as capital expenditure.

Cash

Money in the form of bills or coins, available for transactions or on hand.

Equipment

Tangible assets used in operations, such as machinery or office hardware, which are not intended for sale in the regular course of business.