Which of the Following Statements Is TRUE Concerning Operating Leverage

question 88

Multiple Choice

Which of the following statements is TRUE concerning operating leverage?

• A)It summarizes the risk-return tradeoff across alternate revenue possibilities.
• B)It measures the change in operating income when costs change proportionately with the change in the number of units sold.
• C)The degree of operating leverage increases inversely to the number of units sold.
• D)The degree of operating leverage remains constant (in the relevant range)when there is a change in the number of units sold.
• E)The degree of operating leverage equals contribution margin divided by operating income, at any specific sales level.

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Definitions:

Apples

A fruit produced by an apple tree, commonly enjoyed worldwide and used in various culinary dishes.

Bananas

A tropical fruit that is elongated and curved, with soft pulpy flesh rich in starch, enclosed in a rind which may be green, yellow, or brown when ripe.

Utility Function

An equation that quantifies the happiness or satisfaction obtained by a consumer from consuming different bundles of goods and services.

Income

The amount of money received, typically on a regular basis, for work or through investments.