If a Profitable Company Has Both Fixed and Variable Costs,its

question 101

True/False

If a profitable company has both fixed and variable costs,its operating leverage will always be greater than 1.

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Definitions:

Direct Materials

Direct materials are raw materials that are directly traceable to the production of specific goods or services and are a key component in determining the cost of goods sold.

Product Cost

The total expenses incurred to create a product, including direct materials, direct labor, and manufacturing overhead.

Factory Building

A structure designed for the manufacture of goods, housing the machinery, equipment, and labor force required for production.

Insurance

A contractual agreement where one party pays premiums in exchange for a promise of compensation for specified potential future losses or damages.