26. If sales are $500,000, variable costs are 75% of sales, and operating income is $50,000, what is the operating leverage? a. 2.5 b. 7.500 c. 1.875 d. 1.333 27. The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished product is classified as: a. factory overhead cost b. direct labor cost c. Conversion cost d. direct materials cost 28. Estimated cash payments are planned reductions in cash from all of the following except: a. manufacturing and operating expenses b. Notes and accounts payable c. notes and accounts receivable collections d. payments for interest or dividends 29. The three categories of manufacturing costs comprising the cost of work in process are direct labor, direct materials, and: a. indirect expenses b. Factory overhead (applied) c. sales salaries expense d. factory overhead (incurred) 30. At the end of the fiscal year factory overhead applied and incurred are reconciled. The following may occur: a. A contribution margin b. If Factory overhead applied is more it is overapplied c. If factory overhead incurred is more it is overapplied d. If factory overhead incurred is more is out of equilibrium