The growth component of the change in operating income measures the increase in revenues minus the increase in costs of selling more units.

Question

Quizplus · Accepted Answer

The growth component of the change in operating income is calculated as the increase in revenues minus the increase in variable costs (i.e. costs that vary directly with the level of production or sales). This measures the amount of profit generated by selling additional units, without taking into account any fixed costs or changes in pricing.

The Growth Component of the Change in Operating Income Measures