A Miniature Golf Course Is a Good Example of Where

question 67

True/False

A miniature golf course is a good example of where fixed costs become relevant to the decision of when to open and when to close for the season.

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Definitions:

Operating Income

Operating income, also known as operating profit or Earnings Before Interest and Taxes (EBIT), is a measure of the profit a company generates from its operations, before subtracting interest expenses and taxes.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent and salaries.

Variable Cost

Costs that vary directly with the level of production or the volume of output.

Operating Leverage (DOL)

A financial metric indicating the proportion of fixed versus variable costs a company has, which affects its earnings before interest and taxes (EBIT) for every percentage change in sales.