All Else Being Equal, a Company with a Low Operating

question 147

Multiple Choice

All else being equal, a company with a low operating leverage will have

• A) relatively high fixed costs.
• B) relatively high variable costs.
• C) a relatively high risk.
• D) a relatively high contribution margin ratio.

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Definitions:

Market Forecast

The projection or estimation of future market trends, sizes, and characteristics based on current and historical data.

Sales in An Industry

The total volume or value of all products or services sold within a specific industry over a certain period.

Future Sales

Projected revenue from selling goods or services over a future period.

Bottom-Up Budgeting

A budgeting approach where individual departments or units estimate their own expenses and revenues, which are then compiled to create an overall organizational budget.