In 2013,the Turnkey Company Had Consulting Revenues of $1,000,000 While

question 105

Multiple Choice

In 2013,the Turnkey Company had consulting revenues of $1,000,000 while costs were $750,000.In 2014,Turnkey will be introducing a new service that will generate $150,000 in sales revenues and $60,000 in costs.Assuming no changes are expected for the other services,operating profits are expected to increase by

• A)$250,000.
• B)$150,000.
• C)$90,000.
• D)$60,000.

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Definitions:

Initial Investment

The amount of money used to start a project, purchase an asset, or invest in a business venture for the first time.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life.

Operating Leverage

A measure of how sensitive a company's operating income is to changes in revenue.

Marginal Tax Rate

The rate of tax applied to the next dollar of taxable income, indicating how much tax will be paid on an additional dollar earned.