Which of the Following Statements Regarding Operating Leverage Is Correct

question 101

Multiple Choice

Which of the following statements regarding operating leverage is correct?

• A) All else the same, firms with high operating leverage have higher total fixed costs.
• B) It is generally easier to decrease operating leverage than it is to increase it.
• C) All else the same, operating leverage will rise as output increases.
• D) In order to calculate the degree of operating leverage all that is needed are variable costs and operating cash flows.
• E) All else the same, the degree of operating leverage rises as the price per unit is increased.

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Definitions:

Pre-work

Tasks or preparations completed before the start of a primary activity or project to ensure its smooth execution and success.

Enlarge

The act or process of increasing in size, volume, scope, or capacity.

Job Enrichment

The process of making a job more rewarding, engaging, and satisfying by adding more meaningful tasks and giving employees more control over their work.

Pay Demand

A request or requirement by employees for increased wages or salaries from their employer.