Miller Company has an operating leverage factor of 5.Thus,an 8% change in ______ should result in a 40% change in ______.The respective amounts that change are:

Question

Quizplus · Accepted Answer

Operating leverage factor = % change in income / % change in sales revenue
5 = % change in income / 8%
% change in income = 5 x 8% = 40%
Thus, a 8% change in sales revenue should result in a 40% change in income. Therefore, the correct answer is B, sales revenue and income.

Miller Company Has an Operating Leverage Factor of 5