Increased Operating Leverage Is Associated with Additional Risk Because​

question 35

Multiple Choice

Increased operating leverage is associated with additional risk because​
1) Lower variable costs increase the variability of total costs
2) Lower variable costs increase the variability of earnings before interest and taxes
3) Higher fixed costs increase the variability of earnings before interest and taxes
4) Higher fixed costs require higher sales to cover total costs.

• A)​1 and 3
• B)​1 and 4
• C)​2 and 3
• D)​3 and 4