Nickleby Ltd Sells Its Single Product for $14 Per Unit

question 77

Multiple Choice

Nickleby Ltd sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: If Nickleby decreases its volume of sales by 10%, what will happen to its degree of operating leverage?

• A) It will decrease.
• B) It will increase.
• C) It will stay the same.
• D) Cannot be determined.

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