1. If Sheldon Corp's Operating Leverage is 9 and Penny Corp's Operating Leverage is 3, then in times of rapidly decreasing unit sales:

A. Penny's profit's will decrease faster than Sheldon's Profits

B. Penny's Profits will be more stable than Sheldon's

C. Sheldon's Profits will increase while Penny's Profits will decrease

D. Sheldon's Profits will be more stable than Penny's

2. If the degree of operating leverage is 4, then a 1% increase in sales should result in a 4% increase in:

A. Variable expense

B. Revenue

C. Contribution Margin

D. Net Operating Income

3. Budget Slack is evident when managers:

A. Reduce actual expenditures

B. Overstate expected expenses

C. Have a team focus

D. Overstate expected sales