During the Years 2013 Through 2015,Powers,Inc

question 45

Multiple Choice

During the years 2013 through 2015,Powers,Inc.,reported the following amounts of net income (dollars in thousands) : Relative to the prior year,the percentage change in net income:

• A)Was the same in 2014 and 2015.
• B)Was larger in 2015 than in 2014.
• C)Was smaller in 2015 than in 2014.
• D)Cannot be determined without knowing how many shares of stock were outstanding.

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, highlighting the fixed versus variable costs structure of a business.

Variable Costs

Costs that change in proportion to the level of production or sales activity, such as raw materials and direct labor.

Operating Income

Income earned from a firm's regular business operations, excluding deductions of interest and taxes.

Absorption Costing

A costing method where all manufacturing costs, including both fixed and variable costs, are attributed to the product, thus fully absorbing them.