Operating Leverage Refers to the Relative Amount of Fixed and Variable

question 227

True/False

Operating leverage refers to the relative amount of fixed and variable costs that make up total costs for a company.

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Definitions:

Equity Method

An accounting technique used to assess the investments in other companies where the investor has significant influence but not full control.

Patent

A form of intellectual property right that grants the patent holder exclusive rights to an invention for a certain time period, preventing others from making, using, selling, or distributing the patented invention without permission.

Significant Influence

A level of control in an investment, usually signifying the ability to participate in financial and operating policy decisions of the investee without having full control.

Equity Method

An accounting technique used to record investments in associate companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's net profits or losses.