Iverson Corporation's Variable Expenses Are 60% of Sales

Multiple Choice

Iverson Corporation's variable expenses are 60% of sales. At a $400,000 sales level, the degree of operating leverage is 5. If sales increase by $40,000, the new degree of operating leverage will be (rounded) :

A) 3.67
B) 2.86
C) 5.25
D) 5.00