The Higher the Operating Leverage Factor,the

question 96

Multiple Choice

The higher the operating leverage factor,the

• A)greater the impact of volume on operating income.
• B)lesser the impact of volume on operating income.
• C)more likely operating income is to stay constant.
• D)greater the chance that none of the above occur.

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Definitions:

Complexity-Related

Pertaining to costs or processes that increase due to the complexity of operations, products, or services.

Order-Related

Pertaining to costs or activities that are directly tied to the processing of specific customer orders.

Raw Ingredients

Basic and unprocessed materials used in the manufacture or production of goods.

Activity-Based Costing

A costing method that assigns costs to products or services based on the activities and resources that go into producing them, aiming to more accurately reflect the costs incurred.