Stromburg Corporation Makes Surveillance Equipment for Intelligence Organizations

Multiple Choice

Stromburg Corporation makes surveillance equipment for intelligence organizations.Its sales are $75,000,000.Fixed costs,including research and development,are $40,000,000,while variable costs amount to 30% of sales.Stromburg plans an expansion which will generate additional fixed costs of $15,000,000,decrease variable costs to 25% of sales,and also permit sales to increase to $93,000,000.What is Stromburg's degree of operating leverage at the new projected sales level?

A) 4.2086
B) 3.7831
C) 4.7288
D) 4.0668
E) 5.3436