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:

Market Price

The market rate at which assets or services can be presently exchanged.

Shares Outstanding

The total number of a company's shares of stock that are owned by shareholders, including institutional investors and individual investors.

Net Present Value

A financial metric that calculates the present value of all cash inflows and outflows of a project or investment using a discount rate.

Market Value

The cost existing in the marketplace for trading an asset or service.