The Magnitude of Operating Leverage for Perkins Corporation Is 4

question 130

Multiple Choice

The magnitude of operating leverage for Perkins Corporation is 4.5 when sales are $100,000.If sales increase to $110,000,profits would be expected to increase by what percent?

• A) 4.5%
• B) 14.5%
• C) 45%
• D) 10%

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Definitions:

Accounts Receivable

Amounts owed to a company by customers for goods or services that have been delivered or used but not yet paid for.

Accumulated Depreciation-Building

The total amount of depreciation expenses that have been charged against a building asset over its useful life, reducing its book value.

Advertising Expense

The costs incurred in promoting products or services to potential customers through various media outlets.

Cost of Goods Sold

Cost of Goods Sold (COGS) is the direct costs attributable to the production of the goods sold by a company, including material and labor costs.