Practicality Partnership provides budgeting and financial investment counseling.

Practicality Partnership provides budgeting and financial investment counseling. The firm earned $500,000 in revenue and incurred $100,000 in variable costs last month. If the firm has $250,000 in fixed costs each month, Last month, what was the firm's margin of safety (in revenue dollars) and degree of operating leverage?

Selected Answer:

a. Margin of safety: $312,500; Degree of operating leverage: 2.667

b. Margin of safety: $187,500; Degree of operating leverage: 2.667

c. Margin of safety: $187,500; Degree of operating leverage: 0.375

d. Margin of safety: $312,500; Degree of operating leverage: 0.375

Expert Solution

Answer: Option: (B) Margin of safety $187,500; Degree of operating leverage:2.667

Explanation:

ekkarill92 answered 2 years ago

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