1. A company with a degree of operating leverage of 4 would expect net operating income to increase by 200% if sales increased from $100,000 to $150,000.
A) True
B) False
2. For a given level of sales, a low contribution margin ratio will produce less net operating income than a high contribution margin ratio.
A) True
B) False
3. At the break-even point: Sales - Variable expenses = Fixed expenses.
A) True
B) False
4. The impact on net operating income of a given dollar change in sales can be computed by applying the contribution margin ratio to the dollar change in sales.
A) True
B) False