Based on the Income Statements Shown Below, Which Division Has

question 123

Multiple Choice

Based on the income statements shown below, which division has the cost structure with the highest operating leverage? $$\begin{array} { | l | c | c | c | } \hline & \text { Soft Drinks } & \text { Bottled Water } & \text { Frust Juices } \\\hline \text { Revenue } & \$ 50,000 & \$ 50,000 & \$ 50,000 \\\hline \text { Variable costs } & ( 10,000 ) & ( 5000 ) & ( 30,000 ) \\\hline \text { Contribution margin } & 40,000 & 45,000 & 20,000 \\\hline \text { Fixed costs } & ( 30,000 ) & ( 40,000 ) & ( 10,000 ) \\\hline \text { Net income } & \$ 10,000 & \$ 5,000 & \$ 10,000 \\\hline\end{array}$$

• A)Bottled Water.
• B)Fruit Juices.
• C)Soft Drinks.
• D)The three divisions have identical operating leverage.

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Definitions:

Cognitive Therapy

A form of psychotherapy that treats mental health problems by altering dysfunctional thoughts, behaviors, and emotional responses.

Systematic Desensitization

A behavioral therapy technique designed to gradually reduce anxiety and fear by slowly exposing the individual to the anxiety source without any danger.

Cognitive Therapy

A form of psychotherapy that emphasizes the importance of thought patterns in contributing to and maintaining psychological disorders.

Behavior Therapy

A therapeutic approach that focuses on changing negative behaviors through various behavior modification techniques.