Use the Below Information to Answer the Following Question Refer to the Table

question 71

Multiple Choice

Use the below information to answer the following question.
$\begin{array}{lr}\text { Sales }(100,000 \text { units }) & \$ 1,000,000 \\\text { Variable costs } & 300,000\\\text { Contribution margin } & 700,000 \\\text { Fixed manufacturing costs } & 200,000\\\text { Operating income } & 500,000 \\\text { Interest } & 75,000\\\text { Earnings before taxes } & 425,000 \\\text { Taxes }(30 \%) & 127,500\\\text { Net income }&\$297,500\end{array}$
Refer to the table. The degree of operating leverage is ________.

• A) 1.40x
• B) 1.56x
• C) 3.33x
• D) 2.22x

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Definitions:

Expenses

Costs incurred by a business in the process of earning revenues.

Not-for-Profit Entity

An organization that operates for purposes other than making a profit, often focusing on a social, educational, or charitable mission.

Contributed Services

Services provided by individuals or entities for free, which if not provided for free would require purchase, thus bearing an implicit value to the recipient organization.

Voluntary Health And Welfare Entity

Voluntary Health And Welfare Entity is a type of nonprofit organization that raises or receives funds to finance health and welfare services, relying significantly on voluntary contributions.