Question: Operating leverage for ACDC Company is 3.5 for current sales of $100,000 and current net income of $20,000. Which of the following statements is/are true?

Operating leverage for ACDC Company is 3.5 for current sales of $100,000 and current net income of $20,000. Which of the following statements is/are true?

I. If sales increase by 2%, net income will increase by 7%.

II. Current contribution margin is $70,000

a) only I is true

b) only II is true

c) neither are true

d) both I and II are true

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