Operating Leverage Is an Important Concept for Many Companies

question 87

Essay

Operating leverage is an important concept for many companies.
Required:
A. Define operating leverage.
B. Assume that a firm pays no income taxes and is planning to increase its selling price. If sales volume in units does not change, what will be the effect on the operating leverage factor? Explain.
C. Assume that another firm that pays no income taxes is planning to increase total fixed manufacturing costs and decrease variable manufacturing costs per unit. At the present volume of production, the total manufacturing costs will be unchanged. What will this change do to the operating leverage factor? Explain.

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Definitions:

Proofs Of Credibility

Evidence or demonstrations that establish the trustworthiness and reliability of a person or entity.

Objection Eliminators

Techniques or strategies used in sales to overcome or mitigate potential objections from prospects.

Nonverbal Cues

Forms of communication without using words, including gestures, facial expressions, and body language, that convey messages and emotions.

Untrained Listener

An individual who lacks the skills or experience to effectively understand and interpret spoken information, particularly in complex or technical contexts.