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

---

Definitions:

Process Engineer

A professional who designs, implements, controls, and optimizes industrial processes, especially continuous ones within the chemical, energy, or manufacturing sectors.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing a more accurate reflection of the costs incurred.

Highlight

A highlight is a feature or element that is emphasized or made more noticeable, often used to draw attention to a specific point or detail.

Cost of Services

Expenses directly related to the delivery of services, including labor, materials, and overhead costs.