If Sales Are $400,000, Variable Costs Are 75% of Sales

question 177

Multiple Choice

If sales are $400,000, variable costs are 75% of sales, and operating income is $50,000, what is the operating leverage?

• A) 2.5
• B) 7.5
• C) 2.0
• D) 0

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Definitions:

Personal Selling

A direct sales approach where sales representatives personally engage with potential customers to explain and sell a product or service.

Cost-Per-Contact Basis

A marketing metric that calculates the expense involved in reaching one member of the target audience through a specific channel or campaign.

Directly Paid

A financial transaction where payment is made directly from one party to another without intermediaries.

Public Relations

The strategy of communication designed to cultivate mutually advantageous relations between organizations and their communities.