The Following Income Statement Is Provided for Vargas, Inc What Is This Company's Magnitude of Operating Leverage?
A) 3

question 12

Multiple Choice

The following income statement is provided for Vargas, Inc. $\begin{array} { l l } \text {Sales revenue ( 2,500 units \( \mathrm{x} \$ 60 \) per unit) } &\$150,000\\ \text {Cost of goods sold (varable; 2,500 units \( \mathrm{x} \$ 20 \) per unit) } &50,000\\ \text { Cost of goods sold (fixed) } &8,000\\ \text { Gross margin} &92,0000\\ \text { Administrative salaries} &42,000\\ \text {Depreciation } &10,000\\ \text {Supplies (2,500 units x \$4 per unit) } &10,000\\ \text { Net income} &\$30,000\\\end{array}$
What is this company's magnitude of operating leverage?

• A) 3.07
• B) 0.33
• C) 3.00
• D) 1.67

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