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

question 149

Multiple Choice

Use the information below to answer the following question(s) .
Hartville Kitchens has a monthly target operating income of $18,000. Variable expenses are 25% of sales and monthly fixed expenses are $12,000.
-What is Hartville Kitchens' operating leverage factor at the target level of operating income?

• A) 2.50
• B) 1.67
• C) 0.33
• D) 0.60

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Definitions:

Full-Cost Pricing

A pricing strategy where the price of a product or service is determined by adding a standard markup to the total cost of producing or providing it, including both direct and indirect costs.

User-Pays Approach

The user-pays approach is a principle that suggests the costs of using natural resources or environmental services should be borne by those who use them, to encourage resource conservation.

Tax

A compulsory financial charge or other levy imposed on an individual or a legal entity by a governmental organization.

Chronic Effect

A long-term health consequence that arises after prolonged or repeated exposure to a hazardous substance or environmental condition.