If a Company Has a Degree of Operating Leverage of 2.0

question 141

Multiple Choice

If a company has a degree of operating leverage of 2.0 and sales increase by 25%,then:

• A)profit will increase by 20%
• B)total variable costs will not change
• C)profit will increase by 50%
• D)total variable costs will increase by 50%

---

Definitions:

Existence Needs

Desires for physical well-being.

Esteem Needs

The human desire for respect, self-esteem, and recognition from others, important for individual motivation and development.

Praise and Recognition

The act of giving positive feedback or acknowledgment to individuals or teams for their accomplishments and contributions.

ERG Theory

A theory of motivation created by Clayton Alderfer, which organizes human needs into three distinct groups: Existence, Relatedness, and Growth.