When a Small Change in Sales Results in a Large

question 57

True/False

When a small change in sales results in a large change in operating income,one possible reason is that the firm is employing a relatively high degree of operating leverage.

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Definitions:

Ordering Cost

The expenses incurred in placing and receiving orders for materials or products, including paperwork, communication, and transportation costs.

Idle Workers

Employees who are not actively engaged in production or work due to lacking assignments or efficiency breakdowns.

Disrupted Production

Interruptions or disturbances in the normal manufacturing or production process.

Transportation Costs

Expenses associated with the movement of materials, goods, or personnel from one location to another, which can include freight, shipping, and logistics costs.