Asked by
karla infante
on Dec 01, 2024Verified
When a firm's cost structure consists principally of fixed costs,:
A) it is said to have a great deal of operating leverage.
B) those costs consist of rent, depreciation, direct labor, management salaries, direct materials, and utilities.
C) the firm might be a factory with many people and few machines.
D) All of the above
Operating Leverage
An indicator of how increases in revenue lead to rises in operational profit, reflecting the company's balance of fixed to variable expenses.
Fixed Costs
Expenses that do not vary with production level or sales volume, such as rent, salaries, and insurance premiums.
Rent
Payment made by a tenant to a landlord for the use of a property.
- Acquire knowledge regarding the role of leverage in determining a firm's point of financial balance and susceptibility to operational risks.
Verified Answer
VP
Learning Objectives
- Acquire knowledge regarding the role of leverage in determining a firm's point of financial balance and susceptibility to operational risks.
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