As the data on the partial income statements shown below reveal, Netflix Inc. increased its revenues by 53 percent from 2012 to 2014, while its operating income during this period increased by 705 percent.

Required
a. What concept explains, at least in part, how Netflix's net income could rise by 705 percent when its revenue rose only 53 percent?
b. Does the concept identified in Requirement a result from fixed costs or variable costs?
c. Analyze the data for the four expense categories presented above. Which one seems the most responsible for the causing percentage increase in operating income to be so much greater than the percentage increase in revenues? Explain your answer with computations. Note: You will need to use some creative thought for this, as the material in the chapter does not show an exact demonstration, but the concepts involved should be familiar.

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Netflix, Inc Partial Statement of Operations (amounts In thousands) Year ended December 31 2014 2013 2012 Revenues Cost of revenues Marketing Technology and development $5,504,656 $4,374,562 $3,609,282 3,117,203 2,652,058 439,208 329,008 139,016 228,347 $ 49,992 3,752,760 607,186 472,321 469,942 378,769 180,301 General and administrative Operating income 402,648