Operating Leverage Involves the Use of ____

question 30

Multiple Choice

Operating leverage involves the use of ____.

• A) equity and debt in equal proportions
• B) market power
• C) debt
• D) assets having fixed costs

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Definitions:

Physical Inventory

The process of counting and verifying all physical goods and materials in stock by a business.

Shipping Costs

The expenses involved in transporting goods from one location to another, including freight charges, packaging, and handling fees.

Diseconomies of Scale

An economic concept where an increase in production leads to a rise in average costs per unit due to inefficiencies.

Economies of Scale

Cost advantages that a business can achieve by increasing the scale of production, leading to lower average costs per unit due to spread fixed costs and operational efficiencies.