Introductory Management Accounting (BUSI 294)

Ernsting Printers has contracts to complete weekly supplements required by forty-six customers. For 2023 Ernsting Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis:

Assuming activity-cost pools are used, what is the activity-cost driver rate for the design changes cost pool?

In a company with low operating leverage

Group of answer choices

small increases in sales lead to large increases in operating income.

fixed costs are high and variable costs are low.

there is a higher possibility of net loss than a higher-leveraged firm.

less risk is assumed than in a highly leveraged firm.

Which of the following statements is TRUE concerning operating leverage?

Group of answer choices

The degree of operating leverage equals contribution margin divided by operating income, at any specific sales level.

It measures the change in operating income when costs change proportionately with the change in the number of units sold.

It summarizes the risk-return tradeoff across alternate revenue possibilities.

The degree of operating leverage increases inversely to the number of units sold.