Rushenberg Corporations operating leverage is 108 If the com

Rushenberg Corporation\'s operating leverage is 10.8. If the company\'s sales increase by 14%, its net operating income should increase by about:

Multiple Choice 10.8%, 77.1% ,14.0%, 151.2%

Solution

operating leverage=% change in net operating income/% change in sales

Hence net operating income should increase by=(10.8*14%)

which is equal to

=151.2%