Operating Leverage Measures

question 115

Multiple Choice

Operating leverage measures:

• A) how sensitive profit is to a change in fixed costs.
• B) how sensitive profit is to a change in sales volume.
• C) how sensitive profit is to a change in sales price per unit.
• D) how sensitive profit is to a change in tax rates.

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Definitions:

Random Samples

Selections made in such a way that each member of a population has an equal chance of being included, ensuring the sample's representativeness of the whole.

F-test

A statistical test used to compare the variances of two samples to determine if they come from populations with equal variances.

Population Variances

A measure of the variability or spread of a population's data points, representing the average of the squared deviations from the mean.

Two-tail Test

A statistical test used to determine whether there is a significant difference between a sample and a population mean in either direction.