Poutine Company Is Considering Offering Long-Term Contracts to Many of Its

question 48

Multiple Choice

Poutine Company is considering offering long-term contracts to many of its non-contract employees (a switch to fixed labour costs from variable labour costs) .What is the impact of this decision?

• A) The increase in operating leverage results in greater variability in operating income.
• B) The increase in operating leverage results in less variability in operating income.
• C) The decrease in operating leverage results in greater variability in operating income.
• D) The decrease in operating leverage results in less variability in operating income.

---

Definitions:

Financial Advantage

A benefit gained in financial terms, often seen as the edge that one company or entity has over its competitors in terms of cost, efficiency, or profitability.

Special Discounted Price

A reduced pricing offer made available to customers, often as a promotional or loyalty incentive.

Milling Machines

A type of machine tool used in the machining process, capable of performing cutting operations by moving a rotating cutter into the workpiece.

Profitable Use

The deployment of resources in a way that maximizes financial gain or return on investment.