A 10% Change in a Firm's Revenues Is Likely to Result

question 75

Multiple Choice

A 10% change in a firm's revenues is likely to result in a change of more than 10% in the firm's operating income because:

• A)not all of the firm's costs will change in proportion to the revenue change.
• B)the firm has financial leverage.
• C)the contribution margin ratio will change in proportion to the revenue change.
• D)only fixed expenses will change in proportion to the revenue change.

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Definitions:

Psychological Disorders

Mental health conditions characterized by disturbances in thought, emotion, or behavior that cause significant distress or impairment.

DSM-IV

Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, a manual published by the American Psychiatric Association that outlines mental disorders' diagnostic criteria.

Prevention

Prevention involves measures or actions taken to stop something undesirable from occurring, such as diseases or accidents.

Psychological Disorders

Mental health conditions characterized by disruptions in thinking, feeling, mood, and behavior, which impede daily functioning.