Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next...
Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next year. Operating income is
1. expected to increase by 48%
2. expected to increase by 4 %
3. expected to increase by 3%
4. unaffected
Homework Answers
Answer is Option A)
Operating income is expected to increase by 48%
Operating income increase = Sales increase X Operating leverage = 12% X 4 = 48%
Hence answer is Option A)
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Forde Co. has an operating leverage of 4. Sales are expected to
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3)
4)
5)
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