The Degree of Operating Leverage

question 109

Multiple Choice

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.

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Definitions:

External Intercostal Rib Muscles

Muscles located between the ribs that help expand the chest cavity for inhalation.

Lungs Inflate

The process by which lungs expand during inhalation due to the intake of air.

C-Shaped Cartilaginous Rings

The horseshoe-shaped structures of cartilage found in the trachea that provide structural support and keep the airway open.

Cilia

Microscopic, hair-like structures on the surface of cells that move rhythmically to transport substances or facilitate movement.