If the Degree of Operating Leverage Is 1

question 187

True/False

If the degree of operating leverage is 1.3 and the degree of financial leverage is 1.7, the degree of total leverage is 3.0.

---

Definitions:

Utility Costs

The expenses associated with using utilities such as water, electricity, and gas in a business or household.

Machine-hours

A unit of measure that indicates the amount of time a machine has been actively operating in the production process.

Least-squares Regression

A statistical method used to model the relationship between a dependent variable and one or more independent variables by minimizing the sum of the squares of the differences between observed and predicted values.

Monthly Fixed

Costs that do not change with the level of production or sales in a month, such as rent, salaries, and insurance.