At a sales level of $350,000, the magnitude of operating leverage for Pastry Palace Ltd. is 2.0. If sales increase by 25%, by what percentage will profits (net income) increase? a) 25% b) 2.0% c) 50% d) 30%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
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Chapter14: Capital Structure Management In Practice
Section: Chapter Questions
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At a sales level of $350,000, the magnitude of operating leverage for
Pastry Palace Ltd. is 2.0. If sales increase by 25%, by what percentage
will profits (net income) increase?
a) 25%
b) 2.0%
c) 50%
d) 30%
Transcribed Image Text:At a sales level of $350,000, the magnitude of operating leverage for Pastry Palace Ltd. is 2.0. If sales increase by 25%, by what percentage will profits (net income) increase? a) 25% b) 2.0% c) 50% d) 30%
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