If the Operating Leverage Factor Is Known, Which of the Following

question 40

Multiple Choice

If the operating leverage factor is known, which of the following can be determined?

• A) Contribution margin ratio
• B) Contribution margin in dollars
• C) Break-even point in sales dollars
• D) Percentage change in profit for a given percentage change in sales

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Definitions:

Variable Cost

Costs that vary directly with the level of production or service activity.

Decentralisation

The distribution of decision-making powers from central authority to lower-level employees or divisions in an organization.

Goal Congruence

A condition in which the goals of the company's various employees and departments align with the overall objectives of the organization.

Motivation

The internal and external factors that stimulate desire and energy in people to be continually interested and committed to a job or subject.