The Extent to Which an Organization Uses Fixed Costs in Its

question 47

Multiple Choice

The extent to which an organization uses fixed costs in its cost structure is measured by:

• A)financial leverage.
• B)operating leverage.
• C)fixed cost leverage.
• D)contribution leverage.
• E)efficiency leveragE.

---

Definitions:

Human Capital

The abilities, learned knowledge, and lived experiences of a person or collective, regarded with respect to their financial value or expenditure to a business or state.

Physical Capital

Assets used by a business to produce goods and services, such as buildings, machinery, and equipment.

Diminishing Returns

A principle stating that as investment in a single area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other inputs remain constant.

Marginal Product

The additional output generated by employing one more unit of a particular input, holding all other inputs constant.