A manager who wants to determine the percentage impact on income of a given percentage change in sales would multiply the percentage increase/decrease in sales revenue by the:
A) contribution margin.
B) gross margin.
C) operating leverage factor.
D) safety margin.
E) contribution-margin ratio.

Question

Quizplus · Accepted Answer

The operating leverage factor quantifies how a given percentage change in sales volume will affect operating income. It is calculated based on fixed and variable costs and is used to measure the sensitivity of operating income to changes in sales volume.

A Manager Who Wants to Determine the Percentage Impact on Income