A Decrease in Fixed Operating Costs Will Result in ________

question 59

Multiple Choice

A decrease in fixed operating costs will result in ________ in the degree of financial leverage.

• A) a decrease
• B) an increase
• C) no change
• D) an undetermined change

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Definitions:

Product Margins

The difference between the selling price of a product and the cost to produce it, reflecting the profitability of each product sold.

Machine-Hours

A measure used in accounting to allocate manufacturing overhead costs, representing the total hours that machines are operated in the production of goods.

Number of Batches

The total count of groups or sets of items processed or produced together in a manufacturing or production process.

Total Overhead Cost

The combined indirect costs associated with the normal operations of a business, such as administrative expenses, depreciation, and utilities.