Operating Leverage Predicts the Effects Fixed Costs Have on Changes

question 216

Multiple Choice

Operating leverage predicts the effects fixed costs have on changes in operating income when ________.

• A) production is discontinued
• B) there are no sales returns
• C) variable costs change
• D) sales volume changes

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Definitions:

Constructive Fraud

Conduct that is treated as fraud under the law even when there is no proof of intent to defraud, usually because of the existence of a special relationship or fiduciary duty.

Fraudulent Intent

The deliberate intention to deceive another party for unlawful gain or to deprive a victim of a legal right.

Privity

The relationship between parties that are legally participating in the same transaction or agreement.

Accountant Negligence

A situation where an accountant fails to perform their duties with the required level of care and accuracy, leading to financial loss.