Which of the Following Statements Is True Concerning Operating Leverage

question 87

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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