The Magnitude of Operating Leverage for Perkins Corporation Is 4

question 130

Multiple Choice

The magnitude of operating leverage for Perkins Corporation is 4.5 when sales are $100,000.If sales increase to $110,000,profits would be expected to increase by what percent?

• A) 4.5%
• B) 14.5%
• C) 45%
• D) 10%

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Definitions:

Purchasing Power

The amount of goods or services one can obtain with a single unit of currency, determining its value.

Deflation

A decrease in the general price level of goods and services, often indicating an reduction in the supply of money or credit.

Nominal Interest Rate

The percentage rate at which interest is charged or paid on a loan or investment, not adjusted for inflation.

Inflation Rate

The upward trajectory of prices for goods and services, causing a consequent decline in how much one can purchase.