Multiple Choice Questions. (4 points each). The degree of operating leverage a) does not provide a reliable measure of a company's earnings volatility. b) cannot be used to compare companies. c) is computed by dividing total contribution margin by net income. d) measures how much of each sales dollar is available to cover fixed expenses. I. 2. Comfi Airways, Inc, a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Shown below is a recent month's activity in the form of a cost- volume-profit income statement. Fare revenues (400 passenger flights) $24,000 Variable costs $7,000 2,000 uel Others 9,000) Contribution margin Fixed costs Salaries $7,500 Depreciation and others Net income 2,625 (10,125) $4,875 If ticket prices were decreased by 10%, total variable costs would increase by the same percen would be the net income based on this change? a) $5,625. b) $7,875 c) $8,625. d) $10,875. passenger flights would increase by 25%. Howev tage as passenger flights. How mu 3. In the sell or process further decision, costs incurred before the split-off point are a) sunk costs. b) incremental costs. c) relevant costs. d) opportunity costs