Match the following terms (a-e) with their definitions.
-Contribution margin divided by income from operations
A)Profit-volume chart
B)Cost-volume-profit chart
C)Sales mix
D)Operating leverage
E)Margin of safety

Question

Quizplus · Accepted Answer

Operating leverage is the measure of how sensitive a company's operating income is to changes in sales volume. It is calculated by dividing contribution margin by income from operations. The other terms are:
A) Profit-volume chart - a graph that shows the relationship between profit and volume
B) Cost-volume-profit chart - a graph that illustrates the relationship between costs, volume, and profit
C) Sales mix - the proportion of each product sold within a company's total sales
E) Margin of safety - the difference between actual or expected sales and the break-even point.

Match the Following Terms (A-E) with Their Definitions