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:

Expected Rate Of Return

A calculation representing the probable return on an investment, accounting for the risk of different investment options and the likelihood of various outcomes.

Marginal Cost

The extra expenditure required to produce one additional unit of a product or service.

Marginal Benefit

Marginal Benefit is the additional satisfaction or utility gained by consuming one more unit of a good or service.

Expected Profitability

The forecasted return on investment for a business activity or project, considering potential profits and losses.