If Sales Are $400,000, Variable Costs Are 80% of Sales

question 157

Multiple Choice

If sales are $400,000, variable costs are 80% of sales, and operating income is $40,000, what is the operating leverage?

• A) 0
• B) 7.500
• C) 2.0
• D) 1.333

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Definitions:

Supply Chain Costs

All expenses associated with the production and delivery of a company's products from raw materials sourcing to final delivery to the customer.

ROA

Return On Assets, a financial ratio indicating the profitability of a company relative to its total assets, showcasing how efficiently a company uses its assets to generate earnings.

Metric Classification Scheme

A structured framework for categorizing and assessing various metrics or measurements based on predefined criteria to evaluate performance, progress, or outcomes.

SCOR Model

Supply Chain Operations Reference model; a diagnostic tool for supply chain management, covering all business processes and measuring total supply chain performance.