Operating Leverage May Be Defined as the Potential Use of Fixed

question 183

True/False

Operating leverage may be defined as the potential use of fixed operating costs to magnify the effects of changes in sales on a firm's earnings before interest and taxes (EBIT).

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Definitions:

Per-Unit Cost of Production

The average cost incurred in producing one unit of a good or service, including all variable and fixed costs.

Grade-Point Average

A numerical representation of a student's academic performance, averaged across all completed courses.

Economic Profit

is the surplus or gain realized when the total revenues generated by a business exceed the explicit and implicit costs of operation.

Average Total Cost

The sum of all production expenses divided by the amount of products made.