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An Increase in the Selling Price Per Unit Will Decrease

question 102

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An increase in the selling price per unit will decrease an organization's operating leverage, assuming sales unit volume doesn't change and there are no other changes in its cost structure.


Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time, typically expressed as an annual rate.

Bond's Life

The period from the issuance of a bond until it matures and the principal is repaid.

Market Rate

The prevailing price or interest rate available in the open market for goods, services, or securities.

Par Value

The nominal or face value of a bond, stock, or other financial instrument, established at the time of issuance.

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