If Sales Are $500,000, Variable Costs Are 75% of Sales

question 197

Multiple Choice

If sales are $500,000, variable costs are 75% of sales, and operating income is $40,000, what is the operating leverage?

• A) 0
• B) 1.25
• C) 1.3
• D) 3.1

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Definitions:

Sharing Profits

The distribution of a portion of a company's earnings to stakeholders, such as employees or partners.

Limited Partnership

A business structure where at least one partner has limited liability to the extent of their investment, while at least one other has unlimited liability.

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