As Plant Manager or Division Chief Operations Officer of your subject company:

1. Provide your perspective of operating leverage and the effect on profits along with limitations.
2. What cost structure would be most beneficial when sales volume increases? When sales volume decreases? Explain why.
3. As Plant Manager or COO are you more concerned with the contribution margin income statement or the financial income statement? Why?
4. How do you relate the level of projected margin of safety to risk level?
5. Discuss the relevant range of activity related to both fixed and variable costs.