Question

Sales for Green Inc. are expected to change by 30%. If Green's degree of operating leverage is 1.20, how much is Green's operating income expected to change?

Answer 1

Answer: 36%

Explanation:

From the question, we are informed that the sales for Green Inc. are expected to change by 30% and that Green's degree of operating leverage is 1.20.

Green's operating income is expected to change by:

= 30% × 1.2

= 36%