Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Which of the following statement is true? Operating leverage refers to a company's ability to increase its sales volume while decreasing its total fixed

1. Which of the following statement is true?

Operating leverage refers to a company's ability to increase its sales volume while decreasing its total fixed cost.

Operating leverage may help a company increase its profitability but it cannot decrease profitability.

A company that has only variable cost cannot benefit from operating leverage.

To benefit from operating leverage a company must have both fixed and variable costs.

2. Which of the following statements is true? A mixed cost structure (part fixed and part variable) has the least risk of volatile changes in net income.

A fixed cost structure has more risk of volatile changes in net income than a company with a variable cost structure.

The risk of volatile changes in net income is not affected by a company's cost structure (fixed or variable).

A fixed cost structure has less risk of volatile changes in net income than a company with a variable cost structure.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The New Yellow Book Government Auditing Standards

Authors: Rebecca A. Meyer

1st Edition

1119784638, 978-1119784630

More Books

Students also viewed these Accounting questions