Amy Is in Charge of a Project That Has a Degree

question 295

Multiple Choice

Amy is in charge of a project that has a degree of operating leverage of 3.2. What will happen to the operating cash flows if Amy increases the number of units sold by 2 percent?

• A) Decrease by 1.6 percent.
• B) Decrease by 6.4 percent.
• C) Increase by 1.6 percent.
• D) Increase by 4.8 percent.
• E) Increase by 6.4 percent.

Recognize the role and usage of different types of e-commerce websites.

Understand the significance and application of digital certificates and encryption in online security.

Comprehend the structure and components of URLs and the internet architecture.

Gain familiarity with web and app technologies for accessing and sharing content.

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Definitions:

Variable Costs

Variable costs are expenses that change in proportion to the activity of a business.

Financial Break-Even

The point at which total revenues are equal to total fixed and variable costs, resulting in a net income of zero.

Soft Rationing

Internal limitations set by a company on the amount of funds allocated for new investments or projects.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, demonstrating the proportion of fixed versus variable costs a company has.