What Is Meant by the Terms "Favorable" and "Unfavorable" Leverage

question 51

Essay

What is meant by the terms "favorable" and "unfavorable" leverage?

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Definitions:

Manufactures

Companies or individuals involved in the conversion of raw materials into finished goods, through the use of labor and machinery.

Office Furniture

Fixed assets consisting of desks, chairs, tables, cabinets, and other furnishings used in an office environment.

Variable Utilities Cost

Expenses for utilities that change in proportion to the level of production or activity of a business.

High-low Method

The high-low method is a straightforward way to estimate the variable and fixed components of a cost by using the highest and lowest activity levels and the corresponding total costs.