Answer:
70% paid in the month of expenses and remaining paid in next month i.e. (78,400 - 10,000) * 70% = 47,880. (78,400 - 10,000) * 30% = 20,520.
Explanation:
Operating leverage is a measure of how sensitive ______ is to a given percentage change in sales dollars.
1 answer:
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Answer:
False
Explanation:
If Jake decides to increase total sales volume by decreasing the price of its engines, the decrease in price is too large compared to the increase in quantity demanded. The number of engines sold will increase from 5 to 6 (1 more unit) while the price of each engine will decrease from $75,000 to $50,000.
In this scenario, engines are price inelastic:
PED = % change in quantity demanded / % change in price = [(6 - 5) / 5] / [($50,000 - $75,000) / $75,000] = (1 / 5) / ($25,000 / $75,000) = 0.2 / 0.33 = 0.6
when PED is less than 1, the demand is inelastic. This means that a decrease in price will result in a smaller proportional increase in quantity demanded.
