SXF Sells Its Single Product for $14 Per Unit, and Its

question 16

Multiple Choice

SXF sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: If SXF increases its volume of sales by 10%, what will happen to its degree of operating leverage?

• A) It will decrease
• B) It will increase
• C) It will stay the same
• D) Cannot be determined

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Definitions:

Counteroffer

A response to an offer in negotiations that makes modifications to the initial offer.

Common Law

Common Law is a body of unwritten laws based on legal precedents established by the courts.

Mirror Image

A rule in contract law stating that an offer must be accepted exactly with no modifications; the acceptance must "mirror" the offer.

Mutual Assent

Mutual assent is the agreement between parties to enter into a contract, demonstrated by offer and acceptance.