As Total Sales Increase Beyond the Break-Even Point, the Degree

question 182

True/False

As total sales increase beyond the break-even point, the degree of operating leverage will also increase.

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Definitions:

Operating Income

Earnings from a company's core business operations, excluding expenses and revenues that are unrelated to the primary activities.

Unit Selling Price

The cost for one unit of a product when it is sold.

Unit Variable Costs

Costs that vary directly with the volume of production or sales, such as materials and labor, on a per-unit basis.

Contribution Margin Ratio

A financial metric that measures the portion of revenue remaining after variable production costs that can contribute to covering fixed costs and generating profit.