At a sales level of $270,000, the magnitude of operating leverage for Donuts Unlimited is 1.5. If sales increase by 20%, profits (net income) will increase by: a. 20% b. 1.5% c. 15% d. 30%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter14: Capital Structure Management In Practice
Section: Chapter Questions
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At a sales level of $270,000, the magnitude of operating leverage for Donuts unlimited is 1.5.

At a sales level of $270,000, the magnitude of
operating leverage for Donuts Unlimited is 1.5. If
sales increase by 20%, profits (net income) will
increase by:
a. 20%
b. 1.5%
c. 15%
d. 30%
Transcribed Image Text:At a sales level of $270,000, the magnitude of operating leverage for Donuts Unlimited is 1.5. If sales increase by 20%, profits (net income) will increase by: a. 20% b. 1.5% c. 15% d. 30%
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