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:

Contractual Capacity

The legal ability of a party to enter into a contract, including being of legal age and possessing a sound mind.

Binding Contract

An agreement between two or more parties that is legally enforceable.

Preprinted Terms

Agreements or forms that have standard conditions and text already printed on them before they are used, requiring only specific details to be added.

Handwritten Terms

Conditions or clauses manually written into a legal document or contract, which can sometimes hold precedence over printed text.