Operating Leverage Predicts the Effects Fixed Costs Have on Changes

question 216

Multiple Choice

Operating leverage predicts the effects fixed costs have on changes in operating income when ________.

• A) production is discontinued
• B) there are no sales returns
• C) variable costs change
• D) sales volume changes

---

Definitions:

Inputs

Resources such as labor, materials, and capital that are used in the production process to create goods and services.

Output

The total amount of goods or services produced by an individual, firm, or country over a specific period.

Marginal Product

The additional output that is produced by using one more unit of a particular input, while keeping other inputs constant.

Worker

An individual who performs labour for a company or another person in exchange for compensation.