The Higher Fixed Costs Are as a Percentage of Total

question 8

Multiple Choice

The higher fixed costs are as a percentage of total costs:

• A)The lower the operating leverage.
• B)The greater the operating leverage.
• C)Financial leverage remains unchanged.
• D)Operating leverage remains unchanged.
• E)None of the above.

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Definitions:

Machine Hours

The total number of hours that machinery is in operation during a given period, used as a basis for allocating machine-related costs.

Profitable Use

Utilization of resources, assets, or opportunities in a manner that maximizes profits or financial gains.

Constrained Resource

A limited or scarce resource in a production process that can restrict the throughput or output of the entire system.

Milling Machine Time

The time required for a milling machine to complete a piece of work, often considered in manufacturing cost calculations.