Which of the following statements about margin of safety is false? O a. If the variable cost per unit decreases but the number of units sold, unit selling price and total foxed cost are all constant, the margin of safety increases. O b. none of the given answers is false. O c. Margin of safety measures the difference between budgeted revenues and breakeven revenues. Od Ifonly the fixed costs decrease but the number of units sold and unit selling price and unit variable cost are all constant, the margin of safety decreases. O e. If only the fixed costs increase but the number of units sold and unit selling price and unit variable cost are all constant, the margin of safety decreases. Which of the following statements about operating leverage is false? O a The degree of operating leverage is higher for companies with higher fixed costs Ob. All of the given answers are true. Oc Keeping all factors constant, the higher the contribution margin, the higher the operating leverage O d. If the degree of operating leverage higher for a company, this means that the company is more risky than another company with low degree of operating leve Operating leverage measures how operating income will be affected by.changes in sales

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Which of the following statements about margin of safety is false?
a.
If the variable cost per unit decreases but the number of units sold, unit selling price and total foxed cost are all constant, the margin of safety increases.
O b. none of the given answers is false.
O C. Margin of safety measures the difference between budgeted revenues and breakeven revenues.
O d. If only the fixed costs decrease but the number of units sold and unit selling price and unit variable cost are all constant, the margin of safety decreases.
O e Ifonly the fixed.costs increase but the number of units sold and unit selling price and unit variable cost are all constant, the margin of safety decreases.
Which of the following statements about operating leverage is false?
The degree of operating leverage is higher for companies with higher fixed costs
O b. All of the given answers are true.
Oc Keeping all factors constant, the higher the contribution margin, the higher the operating leverage
O d. If the degree of operating leverage higher for a company, this means that the company is more risky than another company with low degree of operating leverage.
O e. Operating leverage measures how operating income will be affected by changes in sales
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Transcribed Image Text:Which of the following statements about margin of safety is false? a. If the variable cost per unit decreases but the number of units sold, unit selling price and total foxed cost are all constant, the margin of safety increases. O b. none of the given answers is false. O C. Margin of safety measures the difference between budgeted revenues and breakeven revenues. O d. If only the fixed costs decrease but the number of units sold and unit selling price and unit variable cost are all constant, the margin of safety decreases. O e Ifonly the fixed.costs increase but the number of units sold and unit selling price and unit variable cost are all constant, the margin of safety decreases. Which of the following statements about operating leverage is false? The degree of operating leverage is higher for companies with higher fixed costs O b. All of the given answers are true. Oc Keeping all factors constant, the higher the contribution margin, the higher the operating leverage O d. If the degree of operating leverage higher for a company, this means that the company is more risky than another company with low degree of operating leverage. O e. Operating leverage measures how operating income will be affected by changes in sales NEXT PA S PAGE hp
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