Question

Picasso’s Pantry is a chain of arts and crafts stores. Results for the most recent year are as follows:


Required
a. What is Picasso’s Pantry’s degree of operating leverage?
b. If sales increase by 5%, what will the new operating income be?
c. Managers are considering changing Picasso’s cost structure by offering employees a commission on sales rather than a fixed salary. What effect would such a change have on the firm’s operatingleverage?


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  • CreatedFebruary 21, 2014
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