A Firm That Has Zero Fixed Costs Will Have a Cash

question 60

True/False

A firm that has zero fixed costs will have a cash flow degree of operating leverage equal to one.

---

Definitions:

Product Costs

The total expenses incurred in creating a product, including direct materials, direct labor, and manufacturing overhead.

Carrying Cost

The total cost of holding inventory, including storage, handling, insurance, and opportunity costs, among others.

EOQ

The calculation used by businesses to find the ideal number of units to order that minimizes the overall costs related to inventory, including storage and ordering costs.

Quantity Discounts

Price reductions offered to buyers who purchase in bulk or exceed specified quantities, incentivizing larger orders.