Answer the following questions using the information below:
Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet:

Southwestern College has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band which will cost another $800. Tickets are expected to be $30 per person. Local business supporters will donate any other items required for the event.
-Which option provides the greatest degree of operating leverage if 600 people attend?
A) Option one
B) Option two
C) Both options provide equal degrees of operating leverage.
D) Operating leverage is indeterminable.

Question

Answer the following questions using the information below:
Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet:
  
Southwestern College has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band which will cost another $800. Tickets are expected to be $30 per person. Local business supporters will donate any other items required for the event.
-Which option provides the greatest degree of operating leverage if 600 people attend?
A) Option one 
B) Option two 
C) Both options provide equal degrees of operating leverage. 
D) Operating leverage is indeterminable.

Quizplus · Accepted Answer

Option one: $18 × 600 / $7,200 = 1.50; Option two: $22 × 600 / $7,600 = 1.74

Answer the Following Questions Using the Information Below