Which of the Following Is an Assumption Made in a Multiproduct

question 129

Multiple Choice

Which of the following is an assumption made in a multiproduct environment?

• A)The sales mix can be determined and will remain constant.
• B)The sales mix must be broken into variable, fixed, and mixed costs.
• C)The relevant range will vary with a change in activity.
• D)Fixed costs are no longer static.

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Definitions:

Operating Leverage

Operating leverage is a measure of how revenue growth translates into growth in operating income, indicating the degree to which a firm can increase operating income by increasing revenue.

Degree of Operating Leverage

A financial ratio that measures how a change in sales volume will affect a company's operating income due to fixed and variable costs.

Temporary Workers

Employees hired for a specific period or to complete a specific task, often without the promise of long-term employment.

Financial Basis

In accounting, the underlying value or cost of an asset or investment used for tax reporting and calculating gains or losses.