If the percentage change in operating income resulting from a given percentagechange in sales is higher than the percentage change in sales itself, thena. an increase in the selling price would not alter the contribution marginper unit.b. variable costs per unit have increased.c. variable costs have decreased in total.d. the company has operating leverage.e. the company has no fixed costs.
If the percentage change in operating income resulting from a given percentagechange in sales is higher than the percentage change in sales itself, thena. an increase in the selling price would not alter the contribution marginper unit.b. variable costs per unit have increased.c. variable costs have decreased in total.d. the company has operating leverage.e. the company has no fixed costs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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If the percentage change in operating income resulting from a given percentage
change in sales is higher than the percentage change in sales itself, then
a. an increase in the selling price would not alter the contribution margin
per unit.
b. variable costs per unit have increased.
c. variable costs have decreased in total.
d. the company has operating leverage.
e. the company has no fixed costs.
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