Which of the Following Is the Most Precise Definition of the Operating

question 80

Multiple Choice

Which of the following is the most precise definition of the operating leverage factor? The operating leverage factor measures

• A) the proportion of fixed costs in a firm's cost structure.
• B) the proportion of variable costs in a firm's cost structure.
• C) the effect that an increase (decrease) in sales volume will have on profit.
• D) the proportion of fixed costs in a firm's cost structure AND the proportion of variable costs in a firm's cost structure.

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Definitions:

Telecommunications Equipment

Hardware used in the transmission, reception, and processing of data and communication signals.

Investment

The allocation of resources, such as time, money, or effort, in hope of generating a future return or profit.

Internal Rate

Often referred to as the internal rate of return (IRR), it is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Automated Molding

A manufacturing process using machines to produce molds for creating parts or products, often utilized for its precision and efficiency.